Economic impact assessment methods councils accept

An economic impact assessment planning document has one job: to give the decision maker a benefit that can be weighed, expressed in terms that survive a hostile reading. That means net additional jobs rather than gross, assumptions taken from published sources rather than from the client's business plan, and a clear statement of what has been adjusted for. A statement claiming 400 jobs with no method behind it will be given almost no weight. A statement claiming 180 net additional full time equivalent jobs, with the density source, the displacement assumption and a sensitivity range, is evidence.

What the assessment is for and who reads it

The economic benefits of a scheme are a material consideration, and on a proposal that conflicts with some policy they are often the main thing in the other side of the balance. So the audience is the case officer writing the report, the economic development officer who may be consulted, and, on larger applications, an independent reviewer instructed by the council.

There is a fourth reader worth designing for. Objectors read these documents closely, and an inflated figure in paragraph three becomes the subject of the first speaker at committee. A conservative, well sourced number does more work than an ambitious one.

Match the assessment to the decision. Where the application turns on the loss of employment land, the relevant question is the comparison between what is lost and what is gained, which is the territory of an Employment Land Assessment as much as an economic impact study. Where it turns on regeneration benefit, the question is net additional activity in a defined area.

Separating construction from operation

Keep the two phases apart throughout, because they are different in kind and a combined headline number conceals that.

Construction employment is temporary and is properly measured in person-years or annualised full time equivalents over the build period, derived from construction spend using published coefficients. Presenting it as a job count without the duration attached is the single most common overstatement in these documents. Two hundred person-years across a four year build is 50 full time equivalents a year, and saying so is more persuasive than saying 200 jobs.

Operational employment is ongoing and derives from floorspace and use. It is the figure that matters for a permanent policy judgement, and it should be presented with its own additionality adjustments.

Where the scheme includes both, give a table with the construction phase and the operational phase in separate blocks, with gross and net figures in each, and state the build period in years.

Employment density and floorspace assumptions

Operational job numbers come from applying an employment density to the floorspace. The reference most English councils expect is the Employment Density Guide published by Homes England, which gives square metres per employee by use and by sub-type, and which is periodically updated.

Three disciplines matter more than the choice of figure. Use the current edition and cite it, with the specific use category you have applied. Be explicit about whether you are using gross internal or net internal area, because the difference between the two on an office building is material and the guide distinguishes them. And apply a realistic occupancy assumption, since a speculative industrial unit will not be fully occupied on day one and a phased build out does not deliver all its jobs at once.

Where a named end occupier exists with actual staffing figures, use them and say so, because operator data beats a generic density every time. Where there is no occupier, do not let the agent's marketing assumptions become the evidence base.

Additionality, displacement and leakage

This is where a credible assessment separates itself, and the framework comes from HM Treasury's Green Book and the additionality guidance that accompanies appraisal practice in England.

The chain runs from gross to net through four adjustments. Leakage, the proportion of benefits going to people outside the defined study area. Displacement, the extent to which the activity reduces activity elsewhere in the area, which on a retail or leisure scheme can be substantial. Substitution, where an employer simply moves existing staff from another site. And multiplier effects, covering supply chain and income effects, which add back a proportion.

Define the study area first, because every one of those adjustments is measured against it. A district, a travel to work area and a region give very different answers, and choosing the widest area to minimise leakage is an obvious move that reviewers spot immediately.

Two honest positions to take. On a scheme relocating an existing local business, say plainly that most of the jobs are safeguarded rather than new, and then argue the safeguarding benefit, which is real. And on multipliers, keep them modest at local level, because a local composite multiplier above about 1.5 invites challenge and adds little to the overall case. Where a vacant building is being brought back into use, the counterfactual matters too, and the reasoning in vacant premises and reoccupation feeds directly into the displacement judgement.

Gross value added and its limits

Gross value added per job, taken from published national or regional data by sector, is the usual way of converting employment into an economic output figure. It is useful for scale and easy to misuse.

Three limits should be stated in the document. It is an average, so applying a national sector average to a specific local operation produces a figure with wide uncertainty around it. It is not additional public revenue, and presenting GVA as though it were a fiscal benefit to the council is wrong. And it double counts if you also present the same employment as a separate benefit without explaining the relationship.

The safest presentation is a single GVA figure for the steady state operational phase, with the source, the sector, the year of the data and a note that it is an estimate based on average productivity. Then stop. A cumulative 30 year GVA total discounted to present value is a legitimate appraisal output in some contexts and reads as inflation in a planning statement.

Local supply chain and spend claims

Claims about local procurement and local spend carry weight when they come with a commitment, and almost none when they do not.

The commitments councils accept, and will often secure through a planning obligation or condition, are an employment and skills plan with targets for local recruitment and apprenticeships during construction, a commitment to advertise opportunities through a named local route, a local procurement policy with a reporting mechanism, and monitoring against the targets with a report to the council at stated intervals.

An illustrative example. A 9,000 m² industrial scheme with no named occupier presents construction employment as person-years over a 30 month build, operational employment using the published density for general industrial at 80 per cent occupancy in a steady state third year, a displacement adjustment reflecting available competing floorspace in the district, and a local employment and skills plan offered by obligation. The figures are illustrative and every assumption would need to be evidenced.

Numbers that will not survive scrutiny

Four recurring problems get assessments discounted.

A gross figure presented as net. Construction jobs quoted without the build period. Multipliers applied on top of an already generous density. And a study area chosen to make the leakage figure small.

There is a fifth that is subtler. An assessment that reads as advocacy throughout, with every assumption pushed the same way, is less useful to the officer than one that concedes a point. If displacement is high because the district has vacant floorspace, say so and argue quality, location and occupier requirement instead. Officers weigh evidence partly on whether they believe the author was trying to be accurate.

Where the same scheme is also arguing that policy requirements cannot be afforded, keep the two documents consistent. A Viability Assessment describing a marginal scheme alongside an Economic Impact Assessment describing transformational benefit is a contradiction a reviewer will point out. Councils usually expect a suitably qualified author for this work, and professional review is strongly advised before submission.

This is general guidance, not legal advice. Check the position with your local planning authority and a qualified economist or surveyor before relying on it.

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