Tri Sail Development, Water Circle, Elsenham Meadows Economic Impact Assessment

Transcription

1 Tri Sail Development, Water Circle, Elsenham Meadows Economic Impact Assessment July 2011

2 Tri Sail Development, Water Circle, Elsenham Meadows Economic Impact Assessment July 2011 Halcrow Group Limited Halcrow Group Limited Elms House 43 Brook Green London W6 7EF Tel +44 (0) Halcrow Group Limited has prepared this report for their sole and specific use. Any other persons who use any information contained herein do so at their own risk. Halcrow Group Limited 2011

3 TABLE OF CONTENTS 1 Executive Summary Economic Benefits 1 2 Introduction Background Assessment Methodology 4 3 Strategic Context National Policy Context Regional Policy Context Local Planning Context Policy Context Summary 10 4 Baseline Review Background Demographics Economic Activity Skills and Occupation Employment Structure Business Base and Enterprise 17 5 Market Demand Property Agents 19 6 Potential Impacts Introduction Employment benefits Net Additional Employment Economic Value of Tri Sail Development 24 7 Other impacts Introduction Wider regeneration impacts Impact on policy objectives Mitigation measures Residual Effects 28 Appendix 1 EEDA Response to 2010 Planning Application

4 1 Executive Summary 1.1 Economic Benefits This Report has been produced by Halcrow on behalf of Cheergrey Properties, in support of a revised planning application for the Tri Sail development at Elsenham Meadows, in Uttlesford District. The report provides a socio-economic impact assessment of the Tri Sail development and concludes that the project would provide significant economic benefits to the District. Tri Sail will provide a much needed stimulus to the local economy and will enhance the reputation of the District as a business location. Key employment issues identified in the Community Strategy and the Core Strategy are: High levels of out-commuting, with 12% of the resident district workforce commuting to London (2001 Census) The need to retain local employment Some businesses expressing problems expanding in the District Cost issues are an important constraint to business development Equality and diversity issues resulting from the rural location Tri Sail development will comprise modern, high-quality business space of exceptional design quality, which will help to address many of these issues. Tri Sail will be an attractive and successful place in which to work and do business which will help to create a new economic centre within the District. It will be a new business hub which will be a focus for higher value jobs and businesses in the financial and business services sector, which is the one sector within Uttlesford which has demonstrated recent growth. The development is therefore likely to be a catalyst for further growth and inward investment and will play a key role in delivering a range of economic, social and environmental objectives for the site and the wider area. Tri Sail is likely to be particularly attractive to larger, high-value businesses, serving a regional or national market, that want to expand their operations or move away from central London and international businesses, attracted by the proximity to Stansted airport. Key sectors include: Financial and Business Services Professional Support services Cheergrey Properties have had firm interest in taking office space in this project from a range of potential high value occupiers, including: A major investment bank One of the top three accountancy firms A US based financial services company One of the largest UK private banks A major German manufacturer Legal firms Insurance Companies We are confident that this interest will be translated into pre-lets if planning permission is granted. The feedback from these occupiers is that the features they like in Tri Sail are: The innovative and iconic building design The location close to Stansted Airport, which is also a core public transportation hub 1

5 The size of the development is sufficient to create a critical mass and an effective business hub, with a full range of on-site amenities The flexible floorplates allow up to 15,000 sq.ft. of floorspace to be let at one level The available evidence suggests that industries within the knowledge economy are likely to be critical to future growth within the UK economy and, moreover, that these sectors are particularly dependent on air services for competing effectively in the global economy. A quarter of companies report that access to air services is important in determining where they locate their operations in the UK. Tri Sail is therefore likely to be a catalyst for further growth and inward investment in these key sectors, which are likely to be critical to the future growth of the UK economy. Tri Sail development is expected to create some 34 FTE jobs during the construction phase and some 430 gross FTE jobs during its operational phase. These are expected to be mostly high-value jobs in the financial and business services sector and the professional services sector. Allowing for deadweight, leakage, displacement and multiplier effects, the development is expected to create 133 net additional jobs at a local level and 218 net additional jobs at a regional level. It is therefore expected to have a major beneficial effect in terms of employment opportunities. Furthermore, Tri Sail development is expected to produce some 4.3 million of GVA for the local economy and 7.1 million of GVA for the regional economy. In terms of the wider socio-economic impacts of the development, building on its proximity to London Stansted Airport, which is a core public transport hub, it is likely to attract further investment and improve the image and perception of the area as a high-quality employment location. The scheme will deliver the development of a currently underused site and would provide employment opportunities for the residents of the District and the wider area. High quality landscaping and the proposed access improvements will ensure that the visual and traffic impacts of the development are minimal. Tri Sail would support several key policies and strategies at local, regional and national level. It supports and is consistent with the policy objectives to stimulate entrepreneurship and innovation, increase economic activity and productivity and deliver high quality, sustainable development. It will also help to deliver economic growth within the nationally important London-Stansted-Cambridge-Peterborough growth area and the regionally significant M11/A120 Corridor. The provision of high-quality office space will contribute to the District s requirement for 25 ha of additional employment land, will help further diversify Uttlesford s business base and would increase Uttlesford s competitiveness as a quality business location. The report concludes that any negative effects on Harlow are likely to be small. Harlow ranks within the top 40% of the most deprived areas of the country. It also has a relatively high proportion of claimant counts and a low skill base with only around 21% of its working age population with NVQ4+ and 18% of its working age population with no qualification. Whilst the area has some high value added employment in research and development as well as legal and accounting the main economic activities are lower value business services such as industrial cleaning as well as manufacturing, retail and wholesale. Legal and accounting services is the sector most likely to be affected by Tri Sail and this made up only 2.7% of the district s employment in Furthermore, this sector comprises mainly small and medium sized companies that satisfy local demand as opposed to the larger, national and international companies which are likely to be attracted to Tri Sail. For this type of company proximity to the airport and the other public transport services it provides is a core locational requirement. The firms that are expected to locate at Tri Sail are also likely to be mainly focussed on high value business and financial services that will mostly require higher qualifications. The low skill base at Harlow compares unfavourably with the relatively highly 2

6 skilled workforce in Uttlesford. The employment and labour force characteristics of Harlow and Tri Sail/Uttlesford are quite different and thus there is unlikely to be any significant implications for investment and jobs at Harlow from Tri Sail. Overall, the report concludes that Tri Sail development will have a positive impact on local and regional economies and will deliver a wide range of economic benefits. 3

7 2 Introduction 2.1 Background This Report has been produced by Halcrow on behalf of Cheergrey Properties, in support of a revised planning application for the Tri Sail development at Elsenham Meadows, in Uttlesford District. The report provides a socio-economic impact assessment of the Tri Sail development. The proposed development at Elsenham Business Park, Essex will consist of a multi storey mixed use commercial and retail building comprising three interlinked buildings with car and cycle parking as well as associated landscaping. The revised application has a reduced floorspace (8,361 sq.m. total compared with 12,541 sq.m.) The report follows the government s guidance on economic impact assessment comprises of the following sections: Assessment Methodology: this section provides an overview into the nature of the assessment. Policy Context: this includes a review of the national, regional, sub-regional and local area policy documents and economic strategies in order to assess the development proposal s contributions to achieve these objectives. Baseline Conditions: this assesses the present socio economic conditions of the neighbourhood areas potentially affected by the proposed development. The analysis includes an appraisal of the local demographic structures, labour market participation, skills profile, employment, productivity and occupational structure as well as entrepreneurial activity and the business base. Impact Assessment: this assesses the following key components where impacts are anticipated as a direct or indirect result in relation to the proposed Tri Sail development: Economic Impacts: in terms of gross direct employment generated at both construction and operational stages of the proposed development. Regeneration benefits and contribution towards relevant policy objectives in the context area. Mitigation Measures: addressing any potential negative economic impacts; Residual effects: considering any negative effects once the mitigation measures have been implemented 2.2 Assessment Methodology The methodology employed is set within the wider guidance frameworks set by the following guidance frameworks: HM Treasury s Green Book ; Evaluation Group on Regional and Urban Programmes (EGRUP) and subsequent 3R s Guidance; DETR s New Approach To Appraisals (NATA); Guidance on Methodology for Multi-modal Studies (GoMMS); Department for Transport s Guidance on Economic Impact Report (EIR); Single Programme Guidance utilised by the Regional Development Agencies and EU regulatory frameworks. 4

8 The assessment has been separated into three phases. Phase One has involved a review of the contributions any schemes would make to the regeneration of the target area. This included two key tasks: an initial baseline audit and review of the identified development area and its hinterland, and consideration of the proposed developments within the current strategic / policy context. This assessment effectively sets out the framework within which the impacts of the proposed developments have been assessed in Phase Two. Finally, Phase Three of the assessment considers the likely significance of the effect. The significance criterion compares the scale of impact in the context of the value it brings to the local economy. The indicators of economic benefit used are income, employment, economic sectors, equity and policy compliance. The scale of benefit is based on: 1. Minor: the value of outputs and outcomes is small within the context of existing scale of activity 2. Moderate: the value of outputs and outcomes medium within the context of existing scale of activity 3. Major: the value of outputs and outcomes large within the context of existing scale of activity 5

9 3 Strategic Context 3.1 National Policy Context Planning Policy Statement 4 establishes a framework for improving employment and productivity in the UK. It is aimed at regional and local planning authorities in order to allow them to set out their plans for economic development. The document emphasises the importance of improving the economic performance of all English regions and aims to reduce the gap in economic growth rates between regions and tackle deprivation. PPS4 particularly encourages planning authorities to provide for long term economic development by: identifying and planning for new or emerging sectors likely to locate in their area and be flexible enough to allow a quick response to changes in economic circumstances making the most efficient and effective use of land, prioritising previously developed land which is suitable for re-use and, subject to the specific policy requirements for town centres, reflect the different location requirements of businesses, such as the size of site required, site quality, access and proximity to markets, as well as the locally available workforce at the local level, identifying a range of sites, to facilitate a broad range of economic development, including mixed use adopting a positive and constructive approach towards planning applications for economic development. Planning applications that secure sustainable economic growth should be treated favourably. PPS4 states that planning applications for economic development should be assessed against the following impact considerations: whether the proposal has been planned over the lifetime of the development to limit carbon dioxide emissions, and minimise vulnerability and provide resilience to, climate change the accessibility of the proposal by a choice of means of transport whether the proposal secures a high quality and inclusive design which takes the opportunities available for improving the character and quality of the area and the way it functions the impact on economic and physical regeneration in the area including the impact on deprived areas and social inclusion objectives the impact on local employment In determining planning applications for economic development which are not in accordance with the development plan, local planning authorities should: weigh market and other economic information alongside environmental and social information take full account of any longer term benefits, as well as the costs, of development, such as job creation or improved productivity including any wider benefits to national, regional or local economies consider whether those proposals help to meet the wider objectives of the development plan 6

10 The former Office of the Deputy Prime Minister (ODPM) Sustainable Communities Plan: Building for the Future national programme (2003) marks a significant step forward towards maintaining and creating sustainable communities across England and bridging the economic gap between London and the other regions. Although the programme has a particular focus on tackling the complexities of housing market dynamics, it is driven forward by broad operating objectives, including prosperity for all, reduced inequalities, greater and better employment opportunities, improved public services, better health and education and low levels of crime and anti-social behaviour. In addressing the challenge of sustainable growth, the Plan aims to accommodate the economic success of the South East and to sustain the international competitiveness of the Region. Therefore, as part of its measures to alleviate pressures related to the Region s economic success, the Document identifies Growth Areas to provide for major growth.. With regards to the London-Stansted-Cambridge Growth Area, the Document highlights the contributions to its growth, especially through successful cluster developments and the rapid increase in the use of Stansted Airport. As for all Growth Areas, the Plan emphasises that developments should incorporate high standards of design to ensure a high quality of the built environment and enhance the surrounding areas. 3.2 Regional Policy Context The Regional Economic Strategy for the East of England (RES, 2008) sets out the vision for the Region for 2031, which is to be internationally competitive with a global reputation for innovation and business growth, to be a region that harnesses and develops the talents and creativity of all, and to be at the forefront of the low-carbon and resource-efficient economy. It is the RES purpose to facilitate a coordinated approach in economic decision making to achieve this vision. While acknowledging economic achievements since 2004, the Document points out that the Region still faces major challenges. These include a more recent slower economic growth rate, an increased need for global competitiveness, skills and infrastructure deprivation and the need for a more sustainable economy. It therefore states that productivity growth, increase in entrepreneurship and innovation, improved management of economic impacts as well as ensuring the Region s attractiveness for inward investment, are essential to raise the region s economic performance. The Strategy proposes various strategic priorities within the following eight categories to achieve this: Enterprise, aiming at improving business performance and developing a stronger culture of entrepreneurship; Innovation: An increased level of R&D activity and outputs across all industries this also includes a clustering approach to facilitate business and knowledge networks, particularly around leading R&D companies and universities; Digital Economy: Aiming to accelerate the use of digital technologies in public services, society and commerce in order to facilitate innovation and productivity growth; Resource Efficiency: including objectives to increase living standards by minimising the use of resources and improving product design; Skills for Productivity: developing skills for the changing economy, including priorities with the aim to increase the regional skills levels as well as graduate retention; 7

11 Economic Participation: increasing level of economic activity and employment as well as a higher level of basic skills to facilitate labour market participation; priorities in this category also aim to stimulate business growth in disadvantaged communities; Transport: aiming to increase efficiency and sustainability of people and goods movement; this includes strategic priorities for the reduction of congestion, the reduction of carbon emissions; and the establishment of transport gateways. Considering the latter, the Strategy acknowledges their importance as employment generators and predicts that by 2030 transport gateways could account for up to 5% of the total GVA. Spatial Economy: including priorities for the provision of an improved design quality and ensuring delivery of housing and employment growth; With specific regards to the London Arc region, of which the M11 corridor is part, the Document specifies strategic ambitions, including the support for measures to raise employment rates and the profile of higher-value employment across the arc. The ambitions further include the idea of enabling cluster expansion and business innovation around the area s key businesses. The East of England Plan (2008) is the regional spatial strategy (RSS) complementing the RES. It provides specific guidelines to facilitate consistent planning in the region. Regional Spatial Strategies have now been revoked and no longer form part of the development plan for the purposes of determining planning applications. Local planning authorities must continue to have regard to the development plan, which will now consist only of adopted DPDs, saved policies and any old style plans that have not lapsed. The East of England Draft Implementation Plan (DIP, 2009) sets out how the long term objective specified in the RES and RSS are to be achieved. The DIP provides details of particular programmes designed to focus investment in order to achieve these priorities of the strategies. Within the DIP, the most relevant themes for this assessment are identified as Enterprise, Business Support & Innovation and Skills & Employability. With regards to the first, the DIP reaffirms the RES commitment to increase entrepreneurial activity and emphasises the ambition to align the provision of housing with the provision of land and services for commercial activities. In terms of Skills and Employability, the DIP states that the increase of the regional skills profile is crucial in order to stimulate higher output and reduce unemployment. 3.3 Local Planning Context The Essex Strategy (2008) sets out the key goals for improving quality of life in the County. It includes strategies for People, Communities, Economy and Sustainability (World). The Strategy emphasises that new housing growth will need to be aligned with employment growth to reduce the extent of commuting and assist towards the County s sustainable economic growth. Therefore, the Strategy aims for the creation of high-value added employment, the attraction of inward investment, the stimulation of business innovation and expansion as well as an increase in the residents skills levels. The District Council is in the early stages of preparing a Local Development Framework, which in due course will supersede the provisions of the adopted Uttlesford Local Plan. The Preferred Options report for the new Core Strategy Development Plan Document was initially published for public consultation in November 2007, with a further round of consultations from February to April

12 The draft Core Strategy affirms the importance of supporting new and existing employment at Policy E1, including existing employment sites. A number of other options are being considered including promoting a mix of uses on larger sites and recognising the need to allow new employment sites on greenfield sites in certain circumstances. Cheergrey Properties has submitted comments on the Core Strategy and suggested inclusion of Elsenham Meadows as a future strategic employment site. The Uttlesford Local Plan (2005) sets out specific policies including Economic Activity, Natural and Built Environment, Housing, Leisure and Cultural Provision, Retailing and Services, Transport and Telecommunications. In relation to the economic context, the Plan s policies aim to: Ensure adequate employment land provision for existing businesses and to facilitate new employment; Ensure the provision of employment land across the district and facilitating alternative employment other than Stansted airport; Provide employment land close to where people live and accessible to all; and Diversify the local economy in the rural area. The Plan further specifies the location and distribution of employment land, to meet the needs of the high-tech sector, office based sector, traditional manufacturing and distribution sectors. Policy E2 proposes the safeguarding of employment land in existing employment areas including the key rural settlements of Elsenham, Great Chesterford, Takeley and Thaxted. The Uttlesford Sustainable Community Strategy (2008) aims to create a sustainable community by addressing economic, social and environmental needs. The Strategy is divided into six core themes, comprised of Children and young people; staying healthy; Developing business; feeling safe; protecting the environment; and getting around. The Strategy identifies the following key issues on developing businesses: High level of out-commuting, leading to a strain on transport related infrastructure; Equality and diversity, e.g. disabled people in rural areas having difficulties accessing jobs; Businesses having difficulty recruiting people with certain skills, caused by a number of factors including the high cost of living within the district; Businesses expressing concerns about the cost of relocating to Uttlesford; and Businesses facing expansion problems within the district; The priorities that were set for the Developing Business category include the development of high value jobs in small businesses, tackling localised deprivation and poverty, the promotion of local tourism and the reduction of the carbon footprint of local businesses The Appraisal of Employment Land Issues (2006) was undertaken to assess the usage and future need for employment land in Uttlesford. With particular reference to the market 9

13 overview in the local context, the document states that Uttlesford generally has a small industrial / warehousing base, which is mainly well occupied. The District s office market is relatively weak, partly due to little speculative office developments at the time preceding the Study. Since the anticipated increase in outsourcing of central London function failed to materialise, existing demand is primarily of local nature. The study anticipated that the expansion of Stansted Airport would result in an increased level of demand for employment space, especially for sites across the M11 corridor. In addition, property agents interviewed as part of the study, considered that the south of Uttlesford would benefit from high tech companies relocating from the A12 corridor to locations at Great Dumrow / Start Hill / Takeley / Elsenham. This is viewed to be the result of the M11/A120 effect for businesses that require locations in proximity to the Airport and good access to M11. In terms of the condition of the premises, the Study found nearly three quarters of sites to be of good or reasonable condition but a quarter to be of poor or worse state. Further, out of the 97 local companies interviewed as part of the Study, some 73% perceived the location as advantageous to their business. With regards to the regeneration and economic development efforts aimed at Harlow, several documents were reviewed. The Halrow Renaissance Business Plan sets out its priorities for 2008/2009. More particularly, its aim for enterprise and employment is to secure the growth of a vibrant SME sector in the Town and to provide increased employment opportunities. Furthermore, Vision 2020 published by Halrow Partnership, aims to achieve economic prosperity by reducing the Town s reliance on larger employers and encouraging the growth of SMEs. Similarly, Harlow s Regeneration Strategy aims to increase the share of employment in SMEs from 53% to 62% by In terms of new employment opportunities over a 5 to 10 year period, the Strategy encourages investment in existing employment areas and creation of new ones. The Strategy particularly aims to achieve a greater diversity of employment with a strong SME sector and recognised clusters of economic specialism in key sectors of importance to the regional economy such as R&D and high tech. 3.4 Policy Context Summary On a national level, PPS4 aims to improve the economic performance of all English regions and to reduce the gaps in growth rates between regions. Therefore, it encourages the creation of employment opportunities and the provision of high quality employment development. PPS4 further encourages authorities to address the requirements of rural areas by considering new economic opportunities. Similarly, the ODPM s Sustainable Communities Plan: Building for the Future highlights the objective of thriving and inclusive communities with improved access to better employment opportunities throughout England. The Plan also mentions the London-Stansted-Cambridge (LSC) Growth Area and highlights the contributions to its growth from cluster developments and the increased importance of Stansted Airport. On a regional level, the RES highlights the importance of productivity growth for the improvement of the Region s economic performance. The RES aims at stimulating entrepreneurship and innovation, increasing economic activity and participation and strives for improved quality and design for new developments. Within its Transport goal, the Strategy aims to strengthen the Region s transport gateways and acknowledges their importance as employment generators. With regards to the London Arc region, the Strategy supports the creation of high value adding employment opportunities and enabling cluster expansion around the area s key businesses. The DIP emphasises the need to align the Region s housing growth with the provision of land for commercial activities. This is further reflected in the Essex Strategy on a local level. In 10

14 addition, the Strategy particularly proposes the creation of high value added employment and stimulation of business innovation. Provision of a range of attractive employment sites is central to the Vision and Objectives of the Core Strategy. The District Vision includes a requirement to provide for local employment growth and to provide for a high quality of life for residents, workers and visitors. The Vision also recognises the positive aspects of development at Stansted Airport and seeks to manage this and to make best use of its presence as an asset to the District which attracts people to live, work and visit. This is subsequently reflected in two of the Core Strategy objectives, which seek provision of enough land and premises of the right type that will meet the anticipated needs and aspirations of local businesses and provide opportunities for catalytic employment in industries attracted by the accessibility associated with Stansted Airport. The Tri Sail development proposal is entirely consistent with these objectives and would help to deliver the employment growth which the Plan seeks. The Uttlesford Local Plan aims to provide sufficient and accessible employment land that contributes to the diversification of the district s economy. The Plan particularly intends to attract businesses in the high tech sector and alternative employment other than Stansted Airport. In addition, the Uttlesford Sustainable Community Strategy aims to attract businesses to Uttlesford by facilitating their relocation and expansion within the area, as well as stimulating small business growth in high value adding industries. In this way the Strategy aims to reduce the level of residents commuting out of the district, facilitate increased access to jobs, including employment created as a result of foreign direct investment, in Uttlesford s rural areas. A review of several policy documents in relation to Harlow s regeneration indicates that partners aim to achieve economic prosperity for the Town by creating a dynamic business base. This in turn is to be facilitated by a focus on attracting and stimulating the local SME sector. 11

15 4 Baseline Review 4.1 Background The area for which the proposals are considered lies within the administrative boundary of Uttlesford, at junction 8 of the M11 and some three miles to the north of Stansted Airport. Considering the scope of the proposal and its location in a mainly rural area, the area for which a socio-economic baseline assessment was conducted is the district of Uttlesford. The analysis considers Uttlesford s performance in key economic indicators relevant to the proposals impacts and benchmarks them against comparators including Essex, the East of England (East) and England. 4.2 Demographics Census 2001 data shows that Uttlesford had a total population of 68,936. More recent ONS Mid-Year Estimates show that in 2007 Uttlesford population stood at 72,500. Since 1997 Uttlesford s population grew by 5.2% which is slightly above the population growth in Essex (5.0%) and the East of England (5.1%). The distict has a relatively higher proportion of people aged between as compared to Essex and the South East. Furthermore, the proportion of people aged 15 to 24 and 25 to 34 year is lower for Uttlesford than the rest. This indicates that the extent to which the working age population in Uttlesford is skewed towards the mature age groups is larger than in the other comparators. Figure 5-1: Uttlesford s Population Age Structure Benchmarked Against Comparators (Sources: Mid-Year Population Estimates 1997, 2007) Age Structure 100% 90% 6.9% 7.7% 7.5% 8.4% 7.5% 8.2% 7.3% 7.8% 8.0% 8.3% 8.9% 8.8% 8.8% 8.6% 8.6% 8.2% 80% 70% 18.3% 20.4% 17.6% 19.1% 16.8% 18.6% 16.4% 17.8% 60% 50% 23.5% 24.1% 21.0% 22.1% 20.9% 22.2% 20.6% 22.2% 40% 30% 20% 13.4% 14.6% 15.3% 9.2% 11.7% 12.2% 10.6% 10.9% 11.5% 12.2% 11.6% 12.4% 15.7% 13.1% 12.1% 13.3% 10% 19.3% 19.3% 18.8% 17.7% 19.1% 17.8% 19.3% 17.6% 0% Uttlesford 1997 Uttlesford 2007 Essex 1997 Essex 2007 East 1997 East 2007 England 1997 England year olds year olds year olds year olds year olds year olds 75 and above Over the 10 year to 2007 people aged above pensionable age have registered the highest growth. In comparison, the proportions of residents aged 15 to 24 and 35 to 49 years have experienced the smallest growth rates in Uttlesford (9.7% and 10.1%). However, unlike its comparators, there was a comparatively strong increase of residents aged between 0 and 14 years in Uttlesford (6.9%). Table 5-1: Change in Population Structure by Age Bands 2001 to 2007 (Sources: Census 2001, Mid- Year Population Estimates 2007, NOMIS) Age Band Uttlesford Essex East England 0-14 year olds 6.9% 1.2% 0.1% -4.3% year olds 9.7% 14.7% 14.5% 15.4% year olds -26.4% -14.3% -14.1% -12.5% 12

16 Age Band Uttlesford Essex East England year olds 10.1% 13.2% 14.3% 12.9% year olds 19.4% 17.4% 18.7% 14.5% year olds 11.1% 6.0% 5.1% 0.5% 75 and above 19.1% 20.0% 18.4% 11.4% Total 6.9% 7.7% 7.5% 5.0% 4.3 Economic Activity Data sourced from the Annual Population Survey reveals that in the period from July 2007 to June 2008 economic activity was with 85.8% considerably higher than the other comparators (Essex: 81.4%, East of England: 81.2%, England: 78.8%). This rather strong performance in terms of economic activity is further supported by the consistently low levels of claimant count and job seeker s allowance claimants 1 in the District as described further below. Figure 5-2: Economic Activity 2007/2008 in Uttlesford Benchmarked Against Comparators (Source: Annual Population Survey, NOMIS) Economic Activity 2007/ % 86.0% % of Working Age Population 84.0% 82.0% 80.0% 78.0% 76.0% 74.0% Uttlesford Essex East England An analysis of claimant count suggests that the level of claimants was lower than the other comparators throughout the observed period between May 2007 and February In general, there was a slight reduction in claimant count in 2007, with all comparators reaching their lowest level of claimants in November Since then, the claimant count has mostly been increasing. This increase was particularly steep from the second half of 2008 to February 2009, when it reached its highest level within the observed period. This suggests that the impacts of the current economic climate have also had their impact on this historically well performing district. Here, the level of claimants more than doubled between August 2008 and February In the absence of unemployment data for the local authority level, this analysis uses claimant count rates and job seeker s allowance as a proxy. 13

17 Figure 5-3: Claimant Count between May 2007 and February 2009 Benchmarked Against Comparators (Source: Claimant Count, NOMIS) Claimant Count 4.5% 4.0% 3.5% % of Working Age Population 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% May- 07 Jun- 07 Jul- 07 Aug- 07 Sep- 07 Oct- 07 Nov- 07 Dec- 07 Jan- 08 Feb- 08 Mar- 08 Apr- 08 May- 08 Jun- 08 Jul- 08 Aug- 08 Sep- 08 Oct- 08 Nov- 08 Dec- 08 Jan- 09 Feb- 09 Uttlesford Essex East England The rates of Job Seekers Allowance (JSA) claimants broadly reflect the claimant count rate analysis above. In relation to its comparators, Uttlesford has a consistently low level of job seeker s allowance claimants. England registers the highest number of claimants throughout the observed period, followed by the East of England and Essex. Since the latest data was only available for August 2008, more recent developments are not reflected in this analysis. Table 5-2: Job Seekers Allowance Claimant Rates in Uttlesford Benchmarked Against Comparators (Source: DWP Benefit Payments Job Seeker s Allowance, NOMIS) Date Uttlesford Essex East England August % 1.6% 1.8% 2.4% August % 1.5% 1.6% 2.1% August % 1.7% 1.8% 2.3% 4.4 Skills and Occupation With regards to the skills levels, data indicates that with 33.5% Uttlesford has a comparatively high proportion of residents with a qualification of NVQ4+ (Essex: 23.4%, East of England: 26%, England: 28.3%). At the same time, the District s proportion of residents without qualifications is lower than its comparators. This indicates that Uttlesford has a strong skills base, particularly when compared to Essex. 14

18 Figure 5-4: Skills Base in Uttlesford Benchmarked Against Comparators (Source: Annual Population Survey 2007, NOMIS) Skills Base 40.0% 35.0% 30.0% % of Working Age Population 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Uttlesford Essex East England With NVQ4+ With no qualification In general, the occupational structure reflects an area s skills base since higher skilled jobs tend to be occupied by residents with higher qualifications and vice versa. This is the case with Uttlesford and most of its comparators. With 47.4%, the District has the highest proportion of employees in professional and managerial occupations amongst the comparators, while only around 16% of employees are working in elementary occupations. Furthermore, broadly similar to the skills levels, the East of England has the second strongest composition in terms of its occupations base followed by Essex and England (43.4%, 18.5%). Table 5-3: Occupational Structure in Uttlesford Benchmarked Against Comparators (Source: Annual Population Survey 2007/2008, NOMIS) Area Employees in professional and managerial occupations Uttlesford 47.4% 16.0% Essex 43.6% 16.2% East 44.2% 17.8% England 43.4% 18.5% Employees in plant / process operatives and elementary occupations The analysis of the income levels amongst the comparators suggests that residents in Uttlesford on average earn with some 29,800 about 4,200 more than the national level. This level reflects the occupational structure and is also clearly higher than the sub-regional ( 27,500) and regional levels ( 26,546). Table 5-4: Average Annual Income Level 2008 in Uttlesford Benchmarked Against Comparators (Source: Annual Population Survey, NOMIS) Area Uttlesford 29,761 Essex 27,500 East 26,546 England 25,520 Average Gross Annual Income 15

19 4.5 Employment Structure Between 2003 and 2007, Uttlesford has seen a reduction of employment by 0.3%. Essex had the strongest decline in employment numbers amongst the comparators (-0.5%) while the East and England registered a growth of 3.2% (see Figure 1-5 below). Figure1-5: Change in Employment Between 2003 and 2007 Benchmarked Against Comparators (Source: Annual Business Inquiry, NOMIS) Change in Employment 2003 to % 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Uttlesford Essex East England -0.5% -1.0% The most recent data from the Annual Business Inquiry shows that with 22.4% of overall employment, distribution hotel and restaurants are the most common employers in Uttlesford followed by transport and communications with 20.7% Between 2003 and 2007, both sectors have experienced a decline in employment numbers (- 3.8%, -3.4% respectively). Nevertheless, the third largest private employment sector, Financial and Business services has registered an increase in employment by 2.4% for the same period. Table 1-5: Employment Analysis by Broad Industrial Classifications in Uttlesford Benchmarked Against Comparators (Source: Annual Business Inquiry, NOMIS) Industry % of employment in Uttlesford 2007 Change of employment between 2003 and 2007 in Uttlesford Location Benchmark with East 2007 Agriculture and fishing 2.0% 6.4% Energy and water 0.1% # Manufacturing 10.7% -10.8% Construction 5.5% -9.6% Distribution, hotels and restaurants 22.4% -3.8% Transport and communications 20.7% -3.4% Financial and business services 17.0% 2.4% Public administration, education & health 17.7% 18.4% Location Benchmark with England

20 Industry % of employment in Uttlesford 2007 Change of employment between 2003 and 2007 in Uttlesford Location Benchmark with East 2007 Other services 3.9% -2.6% Column Total 100.0% -0.3% #: Sample very small to evaluate employment growth rates. 4.6 Business Base and Enterprise Location Benchmark with England 2007 In 2007, Uttlesford had 4,651 businesses. Compared to 2003, this is an increase by 9.4%. Uttlesford s growth in businesses is similar to that for Essex but more than 1% higher than the regional and national growth in business numbers over the same period. Table 1-6: Business Numbers Change between 2003 and 2007 (Source: Annual Business Inquiry, NOMIS) Area Business Numbers in 2003 Business numbers in 2007 % Change between 2003 and 2007 Uttlesford 4,252 4, % Essex 53,688 58, % East 223, , % England 1,952,242 2,115, % With regards to business sizes, Uttlesford has a relatively large proportion of businesses with 1-10 employees (88.7%), especially when compared to the national level (84.8%). The District s proportion of businesses with 11 to 49 employees is with some 8.9% considerably lower than its comparators on sub regional (10.7%), regional (11.1%) and national (11.7%) levels. Uttlesford s business with 50 to 199 employees (2%) is marginally lower than in Essex (2.2%) and nearly 0.8% lower than the national level. Further, the District s proportion of larger businesses with 200+ employees is with 0.3% the smallest amongst its comparators (Essex: 0.4%, East: 0.6%, England: 0.7%). The data therefore indicates that the District primarily tends to attract small businesses, which is likely to be related to the mainly rural character of most of Uttlesford. Table 1-7: Business employment size bands 2007 (Source: Annual Business Inquiry, NOMIS) Area 1-10 employees employees employees Uttlesford 88.7% 8.9% 2.0% 0.3% Essex 86.6% 10.7% 2.2% 0.4% East 85.8% 11.1% 2.6% 0.6% 200 or more employees England 84.8% 11.7% 2.8% 0.7% Between 2003 and 2007, the number of net VAT-Registrations per 10,000 residents was consistently higher than all its comparators over the same period. With an average of 21.1 net VAT registration per 10,000 residents compared to a level of nationally, this indicates that there is a dynamic entrepreneurial culture in the District. Table 1-8: Net VAT-Registrations per 10,000 Working Age Population (Source: VAT Register, NOMIS) Year Uttlesford Essex East England Mean 2003 to

21 Socio- Economic Baseline summary: Demographics - Uttlesford has experienced an above average population growth between 2001 and Data indicates that the District s working age population is skewed towards to mature age groups, to a larger extent than its comparators. In addition, the age group between 25 and 34 has experienced higher than average decrease in Uttlesford, while the 15 to 24 year olds have experienced the comparatively smallest increase. All this suggests that residents in younger working age groups tend to look for opportunities outside the District. Economic Activity - Uttlesford s Economic Activity level compares very well with the national and sub-regional averages. This strong performance is reinforced by consistently low claimant count levels and job seekers allowance claims. However, the most recent claimant count data for 2009 indicates that in general claimant count levels are rising. Although the lowest amongst its comparators, Uttlesford is no exception in this respect. Skills, Occupations and Productivity - The District has a comparatively strong skills base as the proportion of working age residents with a qualification of NVQ4+ is on average 8% higher than its comparators. The proportion of working age residents with no qualification is on average lower by around 1% compared the rest. The District has a comparatively high level of residents in professional and managerial occupations and the lowest level of residents in elementary occupations. This is further carried through to the income levels. The average annual income level is the highest in Uttlesford when compared to the national, subregional and regional levels. Employment Structure Between 2003 and 2007, there have been marginal decreases in employment on the District and sub-regional levels. This is unlike the developments on the regional and national scale, where a growth has been registered. Uttlesford s strongest growth, was in the relatively under represented financial and business services sector. In contrast, the two largest employment sectors (distribution, hotels and restaurants, and transport and communications) both registered a decline between 2003 and The other private employment sectors have generally seen decreases in this period. The proportionally highest decrease was in the relatively small energy and water sector, followed by manufacturing and construction. Business numbers and net VAT-registrations The analysis of business numbers and net VAT-registrations indicates that Uttlesford has a strong enterprise culture with above average increase in business numbers between 2003 and In addition, the number of net VATregistrations per 10,000 residents adults was consistently higher than the comparators over the same period. As with the rest of the comparators, most of the businesses in the District are small sized operations (1-10 employees). However, their proportion is comparatively high while there is relatively low proportion of larger sized businesses in the District. Key Indicator Summary The analyses of the various key baseline indicators show that the District performs well with regards to the economic activity, claimant counts, residents skills, occupation and income levels. Within the employment sectors, data indicates that the most promising private employment industry is the banking finance and insurance sector (business services) as it represents the employment sector with strongest growth between 2003 and In addition, the District has a strong entrepreneurial base, which is evidenced by the growing number of businesses and a high level of net VAT-registrations. However, the main challenges Uttlesford faces are likely to be related to its mainly rural character, such as the above average decrease in its younger working age population. This indicates that they tend to look for opportunities outside the District. Similarly, Uttlesford has a comparatively low proportion of larger sized companies (only half of the East s proportion), implying the lack of attractiveness of the District as a corporate location. 18

22 5 Market Demand 5.1 Property Agents As part of the preparation of this Economic Impact Assessment report, Halcrow consulted with Bidwells and Jones Lang LaSalle real estate agents, BAA, the owner and operator of Stansted Airport, Uttlesford District Council and the East of England Development Agency. The aim of the consultation was to better understand the likely market demand and tenant mix and impacts of the development. Bidwells are one of the real estate companies looking into potential occupants for the office space at Tri Sail development. They describe the profile of businesses that they are looking to attract as being new to the area, mainly City operators and international businesses. Other sectors that they are looking at include banks, accounting, insurance, consulting, business services, legal, back office operations as well as international firms looking to take advantage of the site s proximity to Stansted Airport. Bidwells are looking for large occupiers that will need more than 1 floor, rather than smaller businesses. Jones Lang LaSalle are another real estate agent looking into potential occupants. They expressed confidence that businesses will show interest in the development due to its proximity to the airport and rail station, good road access and housing availability. Like Bidwells, they are also looking into larger companies that want to expand their operations or move away from central London. Key sectors include business services, finance and insurance, back room operations, government and public sector departments and airport related companies. The above confirm the profile of firms likely to move to Tri Sail development. They are expected to be mostly larger, high-value firms from the Financial and Business Services sector that will benefit from the development s proximity to Stansted Airport. BAA was also consulted as Stansted Airport is a key local and regional economic driver. BAA emphasised Stansted Airport s role as a major gateway to Europe and a hub for low-cost airlines serving a plethora of European destinations. It follows that businesses who engage in frequent trips to Europe are likely to be attracted to office accommodation that offers easy access to the airport. BAA also highlighted the introduction of flights from and to Kuala Lumpur by Air Asia, linking Stansted Airport to South East Asia, Oceania and Asia Pacific. There are no flights from and to North America from Stansted Airport at the moment, suggesting that the area is more likely to attract businesses operating in the European and Asian markets. BAA indicated that Stansted Airport is popular with business travellers and Stansted Airport s catchment area is attractive to larger businesses that have mobile staff and international links. Unlike Heathrow Airport which is a major international transfer hub, some 90% of Stansted Airport s passengers terminate their journey there (i.e. they do not transfer to another flight). Furthermore, business travel appears to have remained strong despite the recession and BAA believes it is likely to grow in the future. The above indicate that high-quality office accommodation near Stansted Airport is likely to attract larger, high-value businesses that need good access to the airport in order to meet the travel needs of their staff. Tri Sail is likely to be particularly attractive to larger, high-value businesses, serving a regional or national market, that want to expand their operations or move away from central London and international businesses, attracted by the proximity to Stansted airport. Key sectors include: Financial and Business Services 19

23 Professional Support services Cheergrey Properties have had firm interest in taking office space in this project from a range of potential high value occupiers, including: o A major investment bank o One of the top three accountancy firms o A US based financial services company o One of the largest UK private banks o A major German manufacturer o Legal firms o Insurance Companies We are confident that this interest will be translated into pre-lets if planning permission is granted. The feedback from these occupiers is that the features they like in Tri Sail are: The innovative and iconic building design The location close to Stansted Airport, which is also a core public transportation hub The size of the development is sufficient to create a critical mass and an effective business hub, with a full range of on-site amenities The flexible floorplates allow up to 15,000 sq.ft. of floorspace to be let at one level The available evidence 2 suggests that industries such as these within the knowledge economy are likely to be critical to future growth within the UK economy and, moreover, that these sectors are particularly dependent on air services for competing effectively in the global economy. A quarter of companies report that access to air services is important in determining where they locate their operations in the UK. Tri Sail is therefore likely to be a catalyst for further growth and inward investment in these key sectors, which are likely to be critical to the future growth of the UK economy. 2 Oxford Economic Forecasting: The Economic Contribution of the Aviation Industry in the UK 20

24 6 Potential Impacts 6.1 Introduction This sections aims to quantify the benefits created by the Tri Sail development. In line with the government guidance notes for economic impact assessment this section will look at the gross and net number of jobs created due to the Tri Sail development and will estimate the economic value of the proposal. The employment impact will be assessed both during construction phase and during the operational stage of the development, in accordance with English Partnership guidance. It should be noted that due to the temporary and transitory nature of employment during construction phase, this is of low sensitivity and importance, while employment during the operational phase is considered of high sensitivity and importance. Employment impacts are later converted into gross value added in order to determine the economic value of the proposed development. 6.2 Employment benefits Construction stage One of the key economic impacts is the additional employment directly generated as a result of the development. Given the scope of the proposals the development will lead to creation of new full and part-time jobs during construction phase. The construction for all employment use area of Tri Sail development is estimated to cost 10,575,326. The cost of creating an additional construction job is estimated to be 31,250 per person year according to English Partnership guidance 3. Based on a construction cost figure of 10,575,326 for all uses and the cost of creating an additional construction job of 31,250 per person year, the development at the application site is expected to deliver 34 Ten Year FTE gross new construction jobs. This figure is obtained by dividing the total development cost into the cost for creating a Ten Year FTE construction job. Table 6-1: Employment Impacts: Construction Jobs Application Site (Sources: English Partnership, Halcrow) Development cost 10,575,326 Cost for creating an additional construction job per person year 31,250 Cost for creating a Ten-Year Full Time Equivalent Construction Job 312,500 Gross new construction jobs created (Ten - Year Full Time Equivalent) 34 Considering that the Tri Sail development is committed to use local labour during construction phase both in terms of planning and design and in terms of the delivery, it is expected that most of these jobs will be retained within the local/regional labour market Operational Stage The provision of new floorspace due to the Tri Sail development will lead to the protection and creation of operational jobs for the local economy. The emphasis is on the protection and creation of operational jobs as existing employment at the development will be retained in the region and new gross FTE operational jobs will be created as a result of the development. 3 Calculating Cost per Job - Best Practice Note No. 4: English Partnerships, March

25 Table 6-2: Employment Impacts: Operational Jobs Application Site (Sources: Arup, English Partnership, Halcrow) Floor Space (Sq Ft) Floor Space (Sq M) Employment densities (Sq M) FTE Employment Retail 15,000 1, B1 75,000 6, Total 90,000 8, The Tri Sail development is estimated to provide 8,361 sq m floor space of which 1,394 sq m will be developed for retail and the rest 6,968 sq m will be developed for B1 office use. The employment densities used to convert floor space into Full Time Equivalent Employment are taken from Arup Economics and Planning 4. The employment density used for the office space is 20 sq m per job. This density is proposed for serviced business centres as well as for the offices across the City of London. Due to the nature of this development this is considered an appropriate employment density. The employment density for retail is derived as the average of Restaurants (13 sq m per job), food superstores (19 sq m per job) and town centre retail (20 sq m per job). The proposed development is expected to include a cafe and restaurant, top-up food shopping as well as other small scale services. It is thus considered that since these types of retail fall within all three categories, the use of an average employment density is more appropriate. The analysis shows that Tri Sail development will accommodate a total number of 430 jobs; of those 82 jobs will be in retail and 348 will be office jobs. Elsenham Business Park, the location of the proposed development is already an established employment location with around 400 jobs located within the Park. The proposed development is expected to protect/retain these jobs. Thus the development is expected to create/retain a total number of 830 jobs. Based on the above analysis, the operational employment impact of the application site is likely to have a beneficial impact for the local economy. Considering the scale of the proposals and their long term permanent nature, their impact is considered to have a major beneficial effect. 6.3 Net Additional Employment In appraising the effects of a development it is important to take into account those economic benefits that will be retained on a local or regional level. The analysis below will seek to estimate the additional employment benefits incurred due to the Tri Sail development. To do so, the analysis uses the gross number of jobs estimated in the previous section and uses a set of indicators to estimate the net additional benefits on a local and regional level. The first step in estimating the net additional jobs is to account for deadweight, i.e. the amount of jobs that would have incurred anyway, irrespective of the proposed development. It is assumed that deadweight for the proposed development will be around 25% of the overall job creation. The guidance of English Partnership is used, which estimates 25% of overall deadweight for B1 developments both on a local and regional level. Thus after accounting for deadweight, additional jobs are estimated at 323. No further deadweight is believed to appear from the proposed development. Evidence from similar initiatives supports this assumption. In particular evidence from developments across Gatwick Diamond, the surrounding area of Gatwick airport, show that firms that located in the 4 Employment Densities: A Full Guide, Arup Economic an Planning 22

26 area were new to the region and would not have located in the area if the development of Gatwick Diamond hadn t materialised. Furthermore, discussions with real estate agents around the Stansted airport that are looking into potential occupiers for the proposed development, argue that interest to locate on the proposed development has been expressed by blue chip companies active in sectors such as banking, accounting, legal and engineering. Table 6-3: Net Employment Impacts: Operational Jobs Application Site (Sources: English Partnership, Halcrow) Additionality Calculations Local Ratio Local Impact Regional Ratio Regional Impact Gross jobs Deadweight Leakage Displacement Multiplier effect Net total effects After accounting for deadweight it is important to estimate those impacts that will benefit the local and regional economy. To do this leakage, displacement and multiplier effects are accounted for. Leakage is estimated as the proportion of outputs that will benefit those outside the target area. Whilst Uttlesford has a higher proportion of highly qualified individuals when compared to the region as a whole, it is assumed that due to the location of the development the pool of labour will be wider than the boundaries of the local authority. For this reason leakage is assumed to be high and is rated at 50%. On a regional level leakage is estimated to be much lower at 10%, since it assumed that only a small number of jobs will be allocated to individuals outside the region. Displacement would appear if the proposed development would appear to take market share of already existing firms or would take up scarce local factors of production from other local firms. The proposed development aims to attract large businesses specialised in high value business and financial services. Whilst Uttlesford and the surrounding do have some specialisation in sectors such as accounting, legal etc. it is believed that the impact to those businesses is not going to be significant. As shown in the socio-economic baseline analysis, the vast majority of businesses already active in the area are small and medium size businesses that satisfy local demand for such services. Contrary to this, the occupants of Tri Sail development would want to take advantage of the proximity of the airport and thus it is expected that their target clientele would be across a wider area. Thus, whilst some displacement is expected to take place, this is not considered to be large on a local level and is estimated at 25%. On a regional level displacement is expected to be larger. This is due to the fact that the potential occupants of the proposed developments are likely to take some market share from larger firms located in the wider region. Thus displacement at a regional level is assumed to be medium at 50%. There has been some concern expressed about potential displacement effects for Harlow due to the proposed development. Harlow ranks within the top 40% of the most deprived areas of the country. It also has a relatively high proportion of claimant counts and a low skill base with only around 21% of its working age population with NVQ4+ and 18% of its working age population with no qualification. Whilst the area has some high value added employment in research and development as well as legal and accounting the main economic activities are lower value business services such as industrial cleaning as well as manufacturing, retail and wholesale. Legal and accounting services is the sector most likely to be affected by Tri Sail and this made up only 2.7% of the district s employment in Furthermore, this sector comprises mainly small and medium sized companies that satisfy local demand as opposed to the larger, national and international companies which are likely to be attracted to 23

27 Tri Sail. For this type of company proximity to the airport and the other public transport services it provides is a core locational requirement. The firms that are expected to locate at Tri Sail are also likely to be mainly focussed on high value business and financial services that will mostly require higher qualifications. The low skill base at Harlow compares unfavourably with the relatively highly skilled workforce in Uttlesford. The employment and labour force characteristics of Harlow and Tri Sail/Uttlesford are quite different and thus any displacement effect in Harlow is expected to be small. Aside from direct employment Tri Sail will also stimulate increased economic activity in the area through multiplier effects. There are two types of such effects: supply linkage effects that occur due to the increased purchases that occur by the new firms located in the area and income effects that occur due to the increased wealth that comes as a direct result of the supply linkage effect. The combined multiplier which is estimated as the combination of the two effects is expected to be medium. According to the guidance by English Partnerships a medium multiplier effect for the local area is expected to be around 1.1 and 1.5 for the regional level. The net direct jobs created by the development are estimated by subtracting leakage and displacement effects and multiplying the result by the multiplier effect. The result of this analysis shows that the proposed development will contribute towards the creation of 133 additional new jobs on a local level and 218 additional new jobs on a regional level. Thus, this development is considered to have a major beneficial effect at the local and regional levels. 6.4 Economic Value of Tri Sail Development Gross value added is calculated based on the top 30% of gross annual wages, which according to the Annual Survey of Hours and Earnings, was 32,719 for Essex in Thus, based on the above, the Gross Value Added produced by Tri Sail will be 4,351,627 for the local economy and 7,132,742 for the regional economy. It should be noted that due to the nature of the development future occupiers are expected to employ high value added jobs with wages well above the median wage. Thus it is expected that the above estimates are considered conservative. Conclusions According to the above analysis the direct benefits incurred due to the proposed development are expected to be significant in terms of net additional jobs created during the operational phase and Gross Value Added both at the local and regional levels. Though 34 jobs are expected to be created during the construction phase, the benefits incurred are not considered to be very significant due to their temporary nature. More specifically, the proposed development is expected to create 430 gross jobs and safeguard another 400 jobs already existing on site. On a local level the net additional FTE jobs are estimated at 133 and on regional level at 218. Furthermore, on a local level GVA produced is expected to be around 4.3 million. On a regional level, GVA created is estimated at 6.1 million. Aside from direct employment Tri Sail will also stimulate increased economic activity in the area through multiplier effects. There are two types of such effects: supply linkage effects that occur due to the increased purchases that occur by the new firms located in the area and income effects that occur due to the increased wealth that comes as a direct result of the supply linkage effect. Supply linkage effects will occur through increased demand for high value business services that are supplementary to the services that will be provided by the firms located within Tri Sail, such as accounting, law, advertising, office design etc. Demand is also expected to grow for low value added services such as cleaning, security, catering etc. The increased economic activity from these multiplier effects will boost entrepreneurship across the local area and create wider benefits for local communities. It is also likely to lead to the retention of skilled workers and to provide incentives for qualification and skills. This in 24

28 turn would improve productivity performance and strengthen the growth potentials of the local economy. Tri Sail is also expected to have wider socio-economic benefits that will be significant for the sustainable development of the local community and economy. The existence of London Stansted Airport undoubtedly makes the surrounding area a more attractive place for businesses to locate. This is recognised in the Appraisal of Employment Land Issues, 2006 and in the draft Core Strategy, which seeks to provide opportunities for catalytic employment growth based on accessibility to the airport. However these opportunities will not materialise without appropriate premises to accommodate new businesses. The proximity of Tri Sail to the airport, the availability of good quality office space as well as its capacity to accommodate larger businesses will all help to deliver this objective and to improve the area s attractiveness for inward investment. It is noteworthy that EEDA, in their response to the 2010 planning application, supported the findings of the Economic Impact Assessment and encouraged Uttlesford District Council to determine the application having full regard to the economic potential of the site and the economic benefits that development would bring (see Appendix). 25

29 7 Other impacts 7.1 Introduction The previous section showed the broader employment impacts the proposed development will have on the local and regional economy. In addition to these impacts the current section will assess the wider socio-economic impact that can incur due to the Tri Sail development. This relates to impacts on the key indicators outlined in the baseline data analysis and is considered to be of high sensitivity and importance. 7.2 Wider regeneration impacts The proposed Tri Sail development is expected to have wider socio-economic benefits that will be significant for the sustainable development of the local community and economy. Tri Sail development in combination with the expansion of Stansted airport will pose an important opportunity for foreign direct investment and will improve the perception of the location as an employment destination. A study undertaken by Oxford Economic Forecasting found that aviation s key contribution to the economy is in helping other sectors to operate more efficiently. The study concluded that the provision of air transport services: Influences where companies invest and thus can attract foreign direct investment to the UK; Supports international trade in general which in turn creates economic benefits; Assists the operation of specific sectors which make heavy use of aviation. Other research shows the importance of aviation to the economic development of an area. European Cities Monitor 5, surveyed companies across Europe, asking which are the main factors that they take into consideration when deciding where to locate their business. According to their 2008 results easy access to markets and customers was rated second with 59% of respondents considering this an important factor. In addition good transport links with other cities and internationally was rated 4 th with 54% of businesses considering this an important factor. A widely cited study by Button et al (1995) found that air infrastructure was more important in determining the location of overseas inward investors than for either indigenous firms or for UK headquartered international companies. Hence, availability of air transport can be considered to be a facilitator of inward investment. The existence of London Stansted airport will make the surrounding area a more attractive place for businesses to locate. However these opportunities will not materialise without appropriate premises to accommodate new businesses. The proximity of the proposed development to the airport, the availability of good quality office space as well as its capacity to accommodate larger businesses can potentially improve the area s attractiveness for inward investment. The proposal for a mixed use development can also have additional benefits for sustainable lifestyles. As mentioned earlier, the proposal is predominantly for office space but also includes some floor space for retail and personal services. The retail part aims to satisfy demand by employees of the building and will comprise coffee shops, restaurants, supermarket, hair-dressers and personal health centres, drugstores, newspaper agencies etc. This type of retail can potentially reduce the mileage of employees as they will not need to travel to the town centres in order to get some basic services. 5 Cushman and Wakefield, European Cities Monitor,

30 According to real estate agencies that are looking into potential retail occupiers for the proposed development, interested parties are only interested in occupying smaller floorspace since the return will be higher in such case. There are currently no plans for retail to expand beyond the currently proposed floorspace as this would appear as the returns for offices will be expected to be much higher compared to the returns on retail. The investment opportunities created by the development of Tri Sail development are expected to have wider sub-regional impacts and help towards the sustainable development and regeneration of areas such as Harlow. The low value added services that the district provides are likely to receive multiplier effect from the proposed development that will steam mainly due to supply chain effects. This can potentially improve the district s employment rate take people off worklessness and thus improve income levels and deprivation. In addition potential apprenticeship schemes and other initiatives that might occur due to the increased demand of skilled labour can potentially improve the skills base of the district. The benefits described above can transform Uttlesford and the wider sub-region to a dynamic rural economy, with increased opportunities for its population and a promoter of sustainable development. The socio-economic analysis presented in previous sections showed that Uttlesford is one of the least deprived local authorities of England. Whilst, the employment rate is well above the regional and national average and the workforce is well qualified, the district s population is relatively skewed towards the higher end of the scale. This might be an indication of younger people looking for opportunities away from Uttlesford. Developments such as Tri Sail development, can potentially increase the opportunities for younger people and thus help towards retaining a larger proportion of them after finishing their qualifications. 27

31 7.3 Impact on policy objectives The proposed development is in line with and supports the objectives and aspirations of the national, regional and local policy framework. National policy aims to improve the performance of the English regions and promote sustainable development that takes climate change into consideration. National policies recognise the importance of airports in the achievement of these objectives and argue in favour of the development of more dense, high value added employment land around the airports to take advantage and accommodate future growth. The proposed Tri Sail development would support the objectives of the Regional Economic Strategy of growth, innovation, resource efficiency and skills for productivity. Supply chain multipliers can strengthen entrepreneurship across the area by increasing demand for high value business services that are supplementary to the services that will be provided by the firms located in the buildings, such as accounting, law, advertising, office design etc. Demand is also expected to grow for low value added services such as cleaning, security, catering etc. as well as for retail. This increased economic activity will boost entrepreneurship across the local area and create wider benefits for the local communities. Research demonstrates that increased economic activity improves competitiveness on a local area level and provides additional incentives for product and process innovation across firms. This process in turn improves productivity performance and strengthens the growth potentials of the wider region. The above will also lead to the retention of skilled workforce and can provide incentives for qualification and skills. As shown in earlier sections, a main concern for Uttlesford is the relatively low proportion of younger adults. Local strategies have similar objectives for the area to those of the regional strategies. Local councils recognise the growth potentials generated by the airport and aim to support this growth with an additional 25 ha of employment land in the surrounding area. The proposed development can provide some of the required employment land to accommodate growth. The form of development proposed is more resource efficient compared to groupings of a larger number of smaller buildings. The latter would require more space for circulation, open space etc. and would be unable to afford the cost of provision of underground car parking. Furthermore, smaller floor plates are found to be less space and cost efficient. Due to economies of scale the proposed development is expected to be more resource efficient as compared to smaller developments. 7.4 Mitigation measures Taking into account the positive nature of employment impacts on the local economy as demonstrated in the sections above, it is considered that there is no requirement for mitigation measures in socio-economic terms. 7.5 Residual Effects The proposed development will bring forward a range of benefits in terms of jobs created and help towards the regeneration of the wider area. This will particularly be facilitated by protecting the existing jobs and providing the capacity for the creation of additional employment opportunities. These, and other factors considered in this chapter, will impact positively on the economic output on a local and regional level. A summary of the expected impacts and their significance is shown below. 28

32 Receptor/ Resource Construction Employment Operational Employment Regeneration / economic development and contributions to strategic policy Import ance/ sensiti vity Description of effect High Creation of 34 Gross FTE jobs; due to the nature of the construction industry, the effect is considered to be beneficial but limited. High High Protection and/or creation of 133 net additional FTE jobs on a local level and 218 on a regional level Increase in the number of businesses; inward investment opportunities, assistance towards the objectives of regional and local objectives; redevelopment of brownfield site; assistance to the objectives of sustainable living. Magnitude/ nature of impact Beneficial Temporary Short Term Direct Beneficial Permanent Long Term Direct Beneficial Permanent Long Term Indirect Significance of effect Minor significant Major beneficial Major beneficial Mitigation measures Not required Not required Not required Residual significance Moderate beneficial Major beneficial Major beneficial 29

33 Annex - Business and employment related to Stansted Airport and comparison with Birmingham Airport Introduction This section provides an analysis of employment and business numbers at Stansted and Birmingham Airport in the period between 2003 and Birmingham Airport is taken as a comparator to Stansted because it is a regional airport of a similar size in terms of numbers employed in directly related jobs. It is important to note however, that according to the most recent CAA statistics ( ) Birmingham has less than half the number of passenger movements (539,000 in April 2010) compared with Stansted (1.2 million). The data for this analysis is taken from the workplace and employee analysis dataset 2003 and 2007, which forms part of the Annual Business Inquiry and was sourced from the NOMIS statistical database. From the dataset, the most relevant of the 62 double digit industry divisions were selected. These were split into industries related to the airports operation (airport related) and catalytic industries. The areas for which the analyses were conducted, are the Local Super Output Areas (LSOAs) covering the airports and their neighbouring LSOAs. At Stansted Airport, this includes parts of Takeley, Bamber s Green and Molehill Green. The study area at Birmingham Airport also includes the national Exhibition Centre, which is directly adjacent to the Airport. Employment Analysis In 2007, a total of some 9,380 people were employed in airport related or catalytic industries at Stansted Airport. Only some 7% (653) were in employed in industries related to the catalytic effects of Stansted Airport. This is in contrast to Birmingham Airport, which registered about 400 less employees in airport related employment (37.5%) but a significantly higher number (some 13,860, i.e. 62.5%) in catalytic employment. The low proportion of catalytic employment in industries attracted by the accessibility associated with Stansted Airport is further accentuated by a 25% decrease in this category between 2003 and Birmingham Airport has also seen a decrease in catalytic employment but to a lesser extent (-13.7%). Table 7-1: Airport Related and Catalytic Employment at Stansted and Birmingham Airports and Change Between 2003 and 2007 (Source: Annual Business Inquiry, NOMIS) Stansted Stansted Airport 2007 Airport Change 2003 to 2007 Birmingha m Airport 2007 Birmingham Airport Change 2003 to 2007 Airport Related Employment 8, % 8, % Catalytic Employment % 13, % Business Analysis Stansted Airport registered 335 businesses in airport related or catalytic industries in This was slightly more than half of Birmingham Airport s catalytic and airport related business base (600). Out of these, the majority (53%, i.e. 178 businesses) were in airport related industries at Stansted Airport, while at Birmingham Airport the number of catalytic businesses was clearly more double the number of businesses in airport related industries (airport related: 31%, catalytic: 70%). The number of businesses in catalytic industries has grown slightly stronger at Stansted Airport than at Birmingham Airport (36.5%, 31.3%). Airport related businesses at Stansted have increased at more than double than Birmingham Airport s rate between 2003 and 2007 and have reached almost the same level at

34 Table 7-2: Airport Related and Catalytic Businesses at Stansted and Birmingham Airports and Change Between 2003 and 2007 (Source: Annual Business Inquiry, NOMIS) Stansted Airport 2007 Stansted Airport Businesses Change 2003 to 2007 Birmingham Airport Businesses 2007 Birmingham Airport Businesses Change 2003 to 2007 Airport Related Businesses % % Catalytic Businesses % % Airport Related Employment Industry Analysis The two industries within the airport related sector category that have registered most employees in 2007 are supporting and auxiliary transport activities; activities of travel agencies (33% of total airport related and catalytic employment) and air transport (22%). Clearly, the location quotients for these two employment sectors are particularly high in relation to the national figures (as is indicated by the size of the bubbles in the chart). The third largest airport related employment sector is the Manufacture of transport equipment (13.7%). Out of these three, air transport and the Manufacture of transport equipment have registered substantial decreases in employment between 2003 and 2007 (32% and 14%). The strongest employment growth was within the education sector, which had marginal proportion of employment (0.3%), as can be seen in the graph and is also evidenced by the low location quotient (see size of bubble). Figure 7-1: Airport Related Employment Industries (Source: Annual Business Inquiry, NOMIS) Airport Related Employment Industries 39.0% 34.0% % of Employment % 24.0% 19.0% 14.0% 9.0% 4.0% -1.0% -200% 0% 200% 400% 600% 800% Change 2003 to 2007 Manufacture of transport equipment Wholesale trade and commission trade, except of motor vehicles and motorcycles Retail trade, except of motor vehicles and motorcycles; repair of personal and household goods Land transport; transport via pipelines Air transport Supporting and auxiliary transport activities; activities of travel agencies Post and telecommunications Public administration and defence; compulsory social security Education Other service activities Catalytic Employment Industry Analysis As mentioned further above, catalytic employment related to Stansted Airport has decreased by approximately a quarter between 2003 and 2007.The strongest decrease was within the Other businesses activities category, which decreased by some 39% and represented 4.6% of airport related and catalytic employment at Stansted Airport in The proportionally second largest employment sector, which is also the only one that has a location quotient above 1 is the category Activities auxiliary to financial intermediation (1.6%). Employment in this sector has grown by 57% between 2003 and Further, employment in computer related activities has decreased by nearly 10% and registered an employment proportion of 31

35 0.3% in The number of jobs in Real Estate Activities has also decreased (by 3.8%), resulting in a proportion of 0.3%. Financial intermediation, insurance and pension funding and research and development did not have any employment in the LSOAs that were taken into consideration for Stansted Airport. Figure 7-2: Catalytic Employment Industries ((Source: Annual Business Inquiry, NOMIS) Catalytic Employment Industries 5.9% 4.9% % of Employment 3.9% 2.9% 1.9% 0.9% -0.1% -60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% Change 2003 to 2007 Financial intermediation, except insurance and pension funding Activities auxiliary to financial intermediation Computer and related activites Other business activities Insurance and pension funding, except compulsory social security Real estate activities Research and development Airport Related Businesses Industry Analysis In 2007, the largest proportion of businesses at Stansted Airport was within retail trade (13.4% of total airport related and catalytic businesses). This sector also has had the second strongest growth between 2003 and 2007 (45%). The second largest airport related business sector was Supporting and auxiliary transport activities; activities of travel agencies (9.3%), which has also registered a growth (19%) between 2003 and Air transport (5%) and land transport (6%) have seen the largest decreases in business numbers in this period (- 32% and -20%). The strongest growth in business numbers was within the education sector but its proportion is marginal (1%). Therefore, its growth has to be seen in the context of the small number of businesses in this sector in 2003 at Stansted Airport. Figure 7-3: Airport Related Business Industries (Source: Annual Business Inquiry, NOMIS) Airport Related Business Industries 17.0% 15.0% 13.0% % of Businesses % 9.0% 7.0% 5.0% 3.0% 1.0% -50.0% -1.0% 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% Change 2003 to 2007 Manufacture of transport equipment Wholesale trade and commission trade, except of motor vehicles and motorcycles Retail trade, except of motor vehicles and motorcycles; repair of personal and household goods Land transport; transport via pipelines Air transport Supporting and auxiliary transport activities; activities of travel agencies Post and telecommunications Public administration and defence; compulsory social security Education Other service activities 32

36 Catalytic Businesses Industry Analysis Within the catalytic businesses category, the largest proportion was within the Other businesses services sector (33.1%). The location quotient of businesses in this sector is 1.4, indicating a proportion above the national average. The second strongest business sector falls within Computer and related activities (7%), which has also grown (9.5%) and has location quotient of 1.2. As reflected in the employment analysis, the number of businesses involved in activities auxiliary to financial intermediation has grown strongest, i.e. fivefold. With a location quotient of 3.3 their proportion is relatively high when compared to the national level. The only sector that has decreased in business numbers between 2003 and 2007 were businesses in Real Estate activities (-45%), representing some 3% of the total of airport related and catalytic businesses at Stansted Airport. As reflected in the employment number analysis further above, the areas covering and around Stansted Airport do not have any businesses in the Financial intermediation, insurance and pension funding and research and development sectors. Figure 7-4: Catalytic Business Industries (Source: Annual Business Inquiry, NOMIS) Catalytic Business Industries 39.0% 34.0% 29.0% % of Businesses % 19.0% 14.0% 9.0% 4.0% -1.0% % 0.0% 100.0% 200.0% 300.0% 400.0% 500.0% 600.0% Change 2003 to 2007 Financial intermediation, except insurance and pension funding Activities auxiliary to financial intermediation Computer and related activites Other business activities Insurance and pension funding, except compulsory social security Real estate activities Research and development Conclusions The research evidence and analysis presented above, and evidence from elsewhere in the UK, suggests that airports are a major driver of economic growth and attract not just airport related activities but also a wide range of other economic activities based on accessibility to airports and transport gateways. There are numerous examples of successful business parks with a wide range of economic activities located in close proximity to airports, including: Stockley Park near Heathrow City Place near Gatwick Airport City, near Manchester Birmingham Business Park Liverpool Business Park Robin Hood Business Park, Nottingham Farnborough Business Park Cobalt Park and Quorum, Newcastle Lanswood Business Park, Leeds Maxim, Glasgow Airport Proposed International Business Gateway, Edinburgh Green Park, Reading 33

37 Tri Sail and the wider Elsenham Estate could help to address this need, which would provide significant economic benefits to the District. It is noteworthy that for most of the existing businesses on Elsenham Estate, proximity to the airport is of major importance to their operations. Proximity to the airport is a major locational advantage of Tri Sail and evidence from airports nationally and internationally clearly demonstrates how important this can be as an economic driver. 34

38 Appendix 1 EEDA response to 2010 Tri Sail Application 35

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