Economic Impact Assessment
An Economic Impact Assessment quantifies the economic effects of a proposed development on the local and wider economy. For major planning applications, demonstrating positive economic outcomes can be a decisive factor in securing planning permission, particularly where the National Planning Policy Framework places significant weight on building a strong and competitive economy.
Typical Cost
£300 – £5,000+
Turnaround
1 – 6 weeks
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What is a Economic Impact Assessment?
An Economic Impact Assessment (EcIA) is a technical report that evaluates the economic consequences of a proposed development, both during construction and once the scheme is operational. It measures job creation, local spending, supply chain effects, business rates revenue, and the contribution to gross value added (GVA). The assessment typically uses established economic modelling techniques such as input-output analysis and multiplier effects to calculate direct, indirect, and induced economic impacts. It may also consider potential negative effects such as displacement of existing businesses or competition with town centre uses.
When is a Economic Impact Assessment required?
Local planning authorities commonly request Economic Impact Assessments for major commercial, industrial, retail, and mixed-use developments. Paragraph 85 of the NPPF requires planning decisions to help create conditions in which businesses can invest, expand, and adapt, and an EcIA provides the evidence base for this. Developments involving significant employment generation, out-of-town retail proposals, large-scale housing schemes, regeneration projects, and infrastructure investments are all likely to need one. Some councils include it on their validation checklist for applications exceeding a certain floorspace or job creation threshold.
What does a Economic Impact Assessment include?
A robust Economic Impact Assessment covers the baseline economic conditions of the local area including employment rates, sectoral composition, and deprivation indices. It quantifies the construction phase impacts including temporary jobs, construction spend, and supply chain benefits. The operational phase analysis covers permanent employment creation, salary expenditure within the local economy, business rates contributions, and any tourism or visitor economy effects. The report also addresses displacement, deadweight, leakage, and substitution effects to arrive at net additional impacts rather than gross figures. Sensitivity analysis is usually included to test the robustness of the conclusions under different assumptions.
How much does a Economic Impact Assessment cost?
A proportionate Economic Impact Assessment for a mid-sized commercial or residential development typically costs between £3,000 and £8,000. Large-scale schemes requiring detailed economic modelling, bespoke survey work, and analysis of multiple impact scenarios can cost £10,000 to £25,000. Simpler economic statements for smaller developments that require a lighter-touch approach may be prepared for £1,500 to £3,000.
Who can prepare a Economic Impact Assessment?
Economic Impact Assessments are prepared by specialist economic consultancies, planning economists, or the economics teams within larger multidisciplinary planning and property firms. Practitioners typically hold degrees in economics, economic geography, or planning, and many are members of the Royal Town Planning Institute or the Regional Studies Association. Experience in applying HM Treasury Green Book appraisal methods and understanding of the Homes England Additionality Guide is important for producing assessments that withstand scrutiny.
How long does a Economic Impact Assessment take?
A straightforward Economic Impact Assessment can be completed within 3 to 4 weeks. More complex assessments requiring primary research, stakeholder consultation, or detailed modelling of multiple scenarios typically take 6 to 10 weeks. Where the assessment forms part of an Environmental Impact Assessment, timescales will align with the broader EIA programme.
Frequently Asked Questions
What is the difference between an Economic Impact Assessment and a Retail Impact Assessment?
An Economic Impact Assessment looks broadly at job creation, GVA, business rates, and spending effects across the whole economy. A Retail Impact Assessment focuses specifically on the trade impact of a proposed retail development on existing town centre shops and is required under the NPPF sequential and impact tests. They serve different purposes, though a large retail scheme may need both.
Does the NPPF require an Economic Impact Assessment?
The NPPF does not explicitly mandate an Economic Impact Assessment by name. However, paragraphs 85 to 87 place significant weight on supporting economic growth and productivity, and local authorities routinely request economic evidence to assess whether developments deliver genuine economic benefits. In practice, most major commercial and employment-generating schemes will need one.
What economic multipliers are used in the assessment?
Assessments typically use Type I and Type II multipliers derived from UK input-output tables published by the Office for National Statistics. Type I multipliers capture direct and indirect (supply chain) effects, while Type II multipliers also include induced effects from employee spending. The Homes England Additionality Guide provides a framework for applying these multipliers in a planning context.
Can an Economic Impact Assessment help with Section 106 negotiations?
Yes. A well-evidenced EcIA can demonstrate the economic value a development brings to the area, which strengthens your negotiating position on Section 106 contributions. If the assessment shows significant job creation and local spending, it may support arguments that excessive planning obligations would render the scheme unviable and undermine those economic benefits.
What is displacement and why does it matter?
Displacement measures the extent to which the economic activity generated by your development simply replaces activity that would have happened elsewhere in the local economy. For example, a new supermarket may create jobs but draw trade away from existing shops. A credible EcIA must account for displacement to present net additional impacts rather than misleadingly high gross figures.
Do I need an Economic Impact Assessment for a housing development?
Large housing schemes of 100 units or more are increasingly expected to demonstrate their economic contribution, including construction jobs, new residents' spending power, council tax revenue, and New Homes Bonus income. Some local plans set specific thresholds above which an economic assessment is required. Even where not mandatory, it can strengthen the planning case significantly.
How are construction phase jobs calculated?
Construction employment is typically calculated using labour coefficients published by the Construction Industry Training Board (CITB) or derived from comparable schemes. The construction cost is divided by average output per worker to estimate person-years of employment, which is then converted into full-time equivalent jobs over the build programme duration.
What baseline data is used in an Economic Impact Assessment?
The assessment draws on publicly available datasets including ONS Annual Population Survey employment data, Business Register and Employment Survey statistics, Indices of Multiple Deprivation, Annual Survey of Hours and Earnings wage data, and local authority monitoring reports. This baseline establishes the economic context against which the development's impact is measured.
Can an Economic Impact Assessment address negative impacts?
A thorough assessment should consider both positive and negative economic effects. Negative impacts might include displacement of existing businesses, increased competition for labour, pressure on local infrastructure, or loss of employment land. Addressing these openly and proposing mitigation demonstrates a balanced and credible approach that planning officers will respect.
Is an Economic Impact Assessment needed for Environmental Impact Assessment?
Socio-economic effects are a recognised topic within Environmental Impact Assessment under the Town and Country Planning (Environmental Impact Assessment) Regulations 2017. Where an EIA is required, the economic impact analysis may form a chapter of the Environmental Statement rather than a standalone document. The scope of the economic assessment would be agreed through the EIA scoping process.