Job density and GVA assumptions in an economic case
An economic impact assessment rests on the floorspace per job ratio and the gross value added figure behind it. Where those assumptions break, and how to present net additional effects an officer can rely on.
An economic case stands or falls on two numbers that applicants rarely interrogate: the floorspace per job ratio used to convert square metres into employment, and the gross value added figure used to convert employment into money. Get the economic impact assessment assumptions wrong on either and the whole chain of reasoning collapses, usually in the officer report rather than at appeal.
The most common error is not ambition. It is applying an office employment density to a distribution warehouse, which can overstate jobs by a factor of five or more.
What the economic case is meant to prove
An economic impact assessment answers a specific policy question: what net additional economic benefit would this development bring to a defined area, over what period, and with what confidence.
Net additional is the phrase that matters. A development that attracts an occupier relocating from two miles away may create no new jobs in the district at all, and an assessment that ignores that will be discounted.
The audience is a case officer who needs to attach weight to a benefit in a planning balance, and a committee that will be asked whether the benefit outweighs a harm. So the output has to be a figure a decision-maker can defend, with a stated method and a sensitivity range, rather than a single confident number.
Three things the assessment is not. It is not a viability appraisal, which answers a different question about what the scheme can afford. It is not a needs assessment, which belongs to plan-making. And it is not a marketing document.
Floorspace to jobs conversion ratios
Employment densities are published as a floor area per full-time equivalent job, broken down by use and sub-use. The published national guide on employment densities is the reference most authorities expect, and it varies enormously between uses: offices are among the densest, general industrial considerably less so, and large-scale storage and distribution the least dense of all.
Take the figures from the current edition of that guide, state the edition, and state the sub-use you have selected. Where the occupier is known and has its own staffing data, use it and say so, because an occupier's actual establishment is better evidence than a national average.
Then get the area basis right. This is where most assessments go wrong.
| Issue | What to do |
|---|---|
| Gross internal against net internal area | State which basis the density is expressed in and convert using a stated efficiency ratio |
| Full-time equivalent against headcount | Report both, since retail and hospitality carry high part-time shares |
| Shell and core against fitted space | Say whether unlet or ancillary space has been included |
| Mezzanines and plant areas | Exclude areas that generate no employment |
Mixing a net internal area density with a gross internal area floorspace figure inflates the job count by whatever the efficiency ratio is, commonly in the region of 15 to 20 per cent. An officer who spots that will reasonably assume the rest of the document is similarly loose.
Gross value added and how it is derived
Gross value added per job is the bridge from employment to an economic figure. Derive it rather than borrowing it.
The defensible method uses published national statistics on regional gross value added, divided by workforce jobs, at the regional level and the industry sector that matches the proposed use. A national all-sector average applied to a warehouse in a low-productivity region is not evidence.
State four things whenever a gross value added figure appears: the data source and release date, the geography, the industry sector classification used, and whether the figures are in current or constant prices. Where the assessment projects forward, say what growth assumption has been applied and why.
Resist the temptation to compound. An annual gross value added figure multiplied over 25 years produces a large number that means very little, and presenting it as the headline undermines credibility. Give the annual figure, and if a present value is needed, discount it properly and say at what rate.
Construction phase against operational phase
These are different things measured in different units, and conflating them is a standard criticism.
Construction employment is temporary and should be expressed in person-years of employment rather than as jobs. The derivation is usually from construction cost, using a published output per worker or cost per job ratio, with the period of the build stated. One hundred person-years over a three-year programme is not one hundred jobs.
Operational employment is ongoing and expressed as full-time equivalents at a stated point, usually at full occupation, with the build-up period described.
Report the two separately, in separate tables, and never add them together to produce a single total. Where apprenticeships, local labour agreements or training commitments are offered, they belong in the construction section and are usually secured through a planning obligation rather than counted as benefit twice.
Multipliers, leakage and displacement
Four adjustments turn gross jobs into net additional jobs, and the appraisal framework used across government sets them out.
Leakage is the proportion of the benefit that goes to people outside the study area, typically expressed as the share of jobs taken by residents of other districts. Displacement is the extent to which the development reduces activity elsewhere in the study area, which is material for retail and for any use serving a fixed local market. Substitution covers an occupier simply switching activity between sites. Deadweight is what would have happened anyway without the development.
Multipliers then capture indirect and induced effects through supply chains and spending. Use a composite multiplier appropriate to the geography, because a national multiplier applied at district level overstates the effect substantially.
Set the adjustments out as a transparent sequence.
- Gross direct jobs from floorspace and density.
- Less leakage, at a stated rate with a source.
- Less displacement and substitution, at a stated rate with reasoning.
- Net direct jobs.
- Plus indirect and induced effects, by applying the composite multiplier.
- Net additional jobs, with a sensitivity range.
Show the arithmetic. A table a reader can recalculate is worth more than three pages of narrative.
Presenting net additional effects
Lead with the net additional figure, not the gross one. An assessment that headlines 400 gross jobs and buries a net figure of 120 invites the officer to use the smaller number and distrust the document.
Give a range rather than a point estimate. Low, central and high scenarios driven by the density, leakage and displacement assumptions show that the method has been tested, and they let a decision-maker attach weight to the lower end without abandoning the case.
Be explicit about study area. Jobs are net additional relative to a boundary, and the figure changes depending on whether the boundary is the district, the travel to work area or the region. State the boundary at the front and keep it consistent.
Where the case also rests on employment land supply, the assessment should sit alongside an Employment Land Assessment rather than duplicating it, and the two should use the same floorspace figures.
Where officers discount the figures
Six patterns that get an economic case marked down, in rough order of frequency.
Office densities applied to industrial or distribution floorspace. Headcount presented as full-time equivalents. Construction person-years added to operational jobs. No displacement adjustment on a retail or leisure scheme. A national multiplier used at district level. And a single point estimate with no sensitivity.
A seventh, subtler one: an assessment that quantifies benefits with great care and treats the counterfactual as zero. If the site has an extant permission, or a lawful use generating employment today, the comparison is against that rather than against an empty field.
The honest uncertainty worth acknowledging is that employment densities are averages derived from surveys, and the actual staffing of any single occupier can differ widely from them. Saying so, and giving a range, is more persuasive than a spuriously precise figure.
An Economic Impact Assessment structured this way, with the method, the assumptions table, the sequence of adjustments and the sensitivity range, is what allows an officer to give the benefit weight. Where the scheme also runs a financial argument, keep it in the Viability Assessment and expect both documents to be scrutinised, in the way described in when an inspector reopens viability at appeal. Councils expect suitably qualified authors for economic and viability evidence, and professional review is strongly advised.
Draw the conclusions into the Planning Statement so the planning balance refers to the net figures rather than to the headline. To see which documents a major application is likely to need, enter your postcode on PlanScope.
This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.
Frequently asked questions
Where do employment density figures come from?
From the published national guide on employment densities, expressed as floor area per full-time equivalent job and broken down by use and sub-use. State the edition and the sub-use selected. Where the occupier is known and has its own staffing data, use that instead, because actual establishment figures beat national averages.
Why does the area basis matter so much?
Because densities are expressed against either net internal or gross internal area, and applying a net internal density to a gross internal floorspace figure inflates the job count by the efficiency ratio, commonly around 15 to 20 per cent. State the basis used and the conversion applied, and exclude plant areas that generate no employment.
How should gross value added per job be derived?
From published regional gross value added statistics divided by workforce jobs, at the regional geography and the industry sector matching the proposed use. State the data source and release date, the geography, the sector classification and whether figures are in current or constant prices. A national all-sector average is not evidence.
Can construction and operational jobs be added together?
No. Construction employment is temporary and should be expressed in person-years with the build period stated, while operational employment is ongoing full-time equivalents at a stated point. Reporting them in separate tables is standard, and adding them to produce a single headline is one of the quickest ways to lose credibility.
What adjustments turn gross jobs into net additional jobs?
Leakage, the share of benefit going outside the study area; displacement, the reduction in activity elsewhere within it; substitution, where an occupier switches between sites; and deadweight, what would have happened anyway. A composite multiplier appropriate to the geography then adds indirect and induced effects.
Why do officers discount economic cases?
Most often for office densities applied to industrial floorspace, headcount presented as full-time equivalents, construction person-years added to operational jobs, no displacement adjustment on retail or leisure schemes, national multipliers used at district level, and a single point estimate with no sensitivity range.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.