Economic Case: High Speed Rail to Hastings and Bexhill
Final Report
October 2015
East Sussex County Council, Hastings Borough Council and Rother District Council
Economic Case: High Speed Rail to Hastings and Bexhill
345375 TPN ITD Final 4 P:\Liverpool\ITD\Projects\345375 High Speed Rail Hastings and Bexhill\2. Docs Out\151001 Final report_v4.docx October 2015 Final Report Economic Case: High Speed Rail to Hastings and Bexhill Final Report October 2015
East Sussex County Council, Hastings Borough Council and Rother District Council
Mott MacDonald, Fourth floor, 9 Portland Street, Manchester M1 3BE, United Kingdom T +44 (0)161 638 0885 W www.mottmac.com
Economic Case: High Speed Rail to Hastings and Bexhill
Issue and revision record
Revision Date Originator Checker Approver Description 0 11.12.2014 M Ferrari S Cox Internal draft
0 18.12.2014 M Ferrari S Cox P Hammond Draft report
1 09.03.2015 M Ferrari S Cox P Hammond Final report
2 29.05.2015 M Ferrari N Clay S Cox Final report v2 (RDC comments) 3 23.07.2015 M Ferrari S Cox Final report v3 (Changes following Hastings & Rother Task Force meeting) 4 01.10.2015 M Ferrari S Cox Final report v4 (RDC comments)
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Economic Case: High Speed Rail to Hastings and Bexhill
Contents
Chapter Title Page
Strategic Economic Case – Key Messages i
1 Introduction 1 1.1 Appointment and study team ______1 1.2 Hastings and Bexhill Study Area ______1 1.3 Purpose and scope of study ______3 1.4 Report structure ______5
2 Economic context 6 2.1 Introduction ______6 2.2 Population ______6 2.3 Employment and economy ______8 2.4 Labour market ______10 2.5 Deprivation ______19 2.6 Economic outlook ______20 2.7 Visitor economy ______23 2.8 Summary ______27
3 Economic growth aspirations 28 3.1 Introduction ______28 3.2 London and its surrounds - the big picture ______28 3.3 SE LEP growth ambitions and areas ______30 3.4 Growth ambitions of the study area ______33 3.5 Summary ______39
4 Consultation findings 40 4.1 Introduction ______40 4.2 Background ______40 4.3 Scheme and potential impact ______43 4.4 Summary ______49
5 Economic and regeneration benefits assessment 50 5.1 Introduction and approach ______50 5.2 Existing and future rail infrastructure ______51 5.3 Overarching growth plans ______53 5.4 Visitor economy and potential growth ______61 5.5 Summary ______65
6 Agglomeration benefits and labour supply impacts 67 6.1 Introduction ______67
Economic Case: High Speed Rail to Hastings and Bexhill
6.2 Data analysis ______68 6.3 Results ______70 6.4 Summary ______70
7 Key Conclusions 71 7.1 Introduction and scheme proposals ______71 7.2 Economic context – challenges and growth planned ______72 7.3 Scale of economic impact ______77
Appendices 81 Appendix A. Planning background and settlement analysis ______82 A.1 Introduction ______82 A.2 Hastings – core strategy ______82 A.3 Rother – core strategy ______83 A.4 Settlement analysis ______84 A.5 Tourism and cultural sector ______85 Appendix B. High Speed Rail literature review ______86 B.1 Introduction and background ______86 B.2 High speed rail and economic performance ______86 B.3 International evidence of the economic impact of high speed rail ______88 B.4 The UK experience ______91 B.5 Summary ______93 B.6 References ______94 Appendix C. Consultee list ______95
Economic Case: High Speed Rail to Hastings and Bexhill
Strategic Economic Case – Key Messages
Mott MacDonald was appointed in October 2014 to develop the strategic economic case for extending the high speed rail Javelin services from London St Pancras to Hastings and Bexhill, which will provide a significant reduction in journey times thereby enhancing connectivity with London. The service would be a direct link with no changing at Ashford International and take the London St. Pancras-Hastings and Bexhill journey time down to 68 minutes (from 91minutes currently).
Hastings and Bexhill - exemplar of successful regeneration
Regeneration has been a cornerstone of economic development policy in Hastings and Bexhill for many years and over the last decade, via joined up activity across the public, private and voluntary sectors, public perceptions of the area have been transformed. Over £200m of public sector money has been invested in Hastings and Bexhill including the completion of a new university campus, further education college developments and key commercial developments such as Enviro21 and the Priory Quarter creating new employment space which has attracted high profile mobile investments such as Saga’s insurance operations in 2011. The soon to be completed Bexhill-to-Hastings Link Road will unlock extensive business schemes on 42 acres of land in north-east Bexhill, which alongside the other strategic employment sites being delivered in the study area will transform the area’s commercial property market. The study area’s reputation as a cultural centre continues to strengthen with flagship projects such as the iconic De La Warr Pavilion and Jerwood Gallery stimulating new cultural economic activity. Images and perceptions of dilapidated seaside resorts are being transformed in the light of new investment and a commitment by the public, private & voluntary sectors to address economic development challenges.
Foundations for growth in place
The regeneration of the study area is an ongoing process and the Hastings-Bexhill Six Point Plan sets out a well-co-ordinated approach for economic development to address key action areas to ensure further investment successes and economic growth. Hastings and Bexhill’s regeneration trajectory over the last two decades
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Economic Case: High Speed Rail to Hastings and Bexhill
has ensured that the foundations have been made through the labour market, commercial property market, business support and changing image and perceptions to ensure the area is ready to capitalise on any growth opportunities that emerge. Importantly there is now an established pipeline of premises and development sites that are market ready to support growth and an inviting cultural and quality of life offer for existing and new residents.
Figure E1.1: Hastings Bexhill Six Point Plan
Urban Renaissance
Image Transport Economic Regeneration Hastings and Bexhill Task Force Six Point Plan Enterprise Skills growth
Broadband
Source: Hastings and Bexhill Task Force Six Point Plan
Connectivity cannot be overlooked
Improving connectivity between the study area and the wider South East and London remains a crucial element of economic growth policy moving forward. Under-investment in strategic infrastructure linking the study area to key areas of economic growth nationally is well recognised to have constrained business investment and labour market mobility.
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Economic Case: High Speed Rail to Hastings and Bexhill
Figure E.2: Strategic transport network with high speed rail services
Source: Mott MacDonald
Excellent transport connectivity, particularly to London, is essential in today’s UK economy if regional markets are to prosper. Transport infrastructure investments, such as high speed rail, could bring significant and lasting benefits to localised economies by creating much-needed additional capacity for businesses to reach their key markets in London, the South of England and Europe. Similarly, as the physical clustering of economic growth in London continues sustaining growth of the centre and good access to it will remain a strategic economic priority. This includes improving capacity links to an expanding labour market beyond London and its traditional commuter belt.
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Economic Case: High Speed Rail to Hastings and Bexhill
High speed rail could super charge the economy
The transformation of Hastings and Bexhill has clearly begun and planning targets remain aspirational to ensure such momentum continues. This process of transformation will take time but high speed rail is clearly perceived by both the public and private sector as a catalyst for growth in the future, supporting and enhancing the growth ambition. The reinvention of the study area’s image, the creation of an established ‘market ready’ pipeline of premises and development sites and a strengthening tourism industry coupled with the high speed rail investment greatly improves the opportunity for Hastings and Bexhill to take advantage of the significant growth opportunities flowing out of London and its surrounds.
The scheme will promote economic activity and growth via the following channels: ° Business investment and growth: Not only can Hastings and Bexhill begin to compete for footloose business investments in the region but indigenous businesses can expand on the back of serving key regional developments. The study area will be able to compete for and build on the strengths of existing clusters such as advanced manufacturing, the creative & cultural sector and elements of professional services now that key markets and customers can be reached more effectively. The entire investment proposition of the area could be transformed through enhanced connectivity, currently a major barrier to investment. This process is already being witnessed by commercial agents and economic development bodies who are reporting an increase in active enquiries on the back of the high speed rail intentions. ° Provision of new commuting opportunities: The service would provide a viable commuting opportunity between the study area and London and its surrounds. The journey time savings places Hastings and Bexhill at the brink of what is considered a sensible commute (1 hour 8 mins to Hastings and 1hr 18 mins to Bexhill) and opens up an entirely new proposition to those high income earners working in London and its surrounds who may choose to reside in the area given the relatively low property prices and quality of life benefits. The inward migration of such groups will in turn raise average incomes in the study area over the longer-term. The attraction of working age commuters will provide benefits in terms of stimulating demand for local services, housing in the area
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Economic Case: High Speed Rail to Hastings and Bexhill
and changing the dynamics of the labour market over the longer term. More specifically this will help to reverse current demographic trends towards an older population by attracting a higher proportion of working age population into the area. ° Visitor economy and growth: The service also presents the opportunity to enhance and build on the strengths of the existing visitor economy via promoting links to new markets within London itself but also further afield given the significantly improved onward connections to the north east of London, to the rest of the country and those key European markets along the HS1 network. Hastings and Bexhill’s tourism sector will also benefit from the tourism developments planned around Ebbsfleet where a major entertainment complex could provide additional visitors and interest in local attractions. Overall the study area, given its existing tourism strengths, is likely to become a significantly more attractive destination for weekend and short breaks. ° Image and perception: The study area has already made great progress in this respect but remains disadvantaged by images of isolation and periphery to key markets of the UK, which would be transformed by establishing a direct, high speed link to London.
Significant potential benefits
Given the scheme will help to stimulate further change and act as a catalyst for economic growth in the future the wider economic benefits assessed in this study are comparatively high (compared to other schemes).
The impacts have been modelled primarily by assessing the benefits that could emerge from land utilisation changes and impacts through increased business investment (inward and indigenous), demand created through the provision of new commuting opportunities and increasing the volume and profile of visitors to the study area. As the growth strategies for the study area1 are aspirational the overall impact of the scheme has been aligned to the underlying economic projection and existing employment land targets (to be achieved by 2028) within those strategies. Overall at least 10% of the growth projected under these targets
1 Rother Local Plan: Core Strategy and Shaping Hastings - The Hastings Planning Strategy 2011 – 2028
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Economic Case: High Speed Rail to Hastings and Bexhill
is assumed attributable to this scheme given that it will directly impact on the demand for employment land and housing land. This high level of attribution is deemed appropriate via the channels highlighted above given: ° The high level of momentum behind regeneration efforts and almost unanimous opinion from the commercial property sector that high speed rail would stimulate current demand for employment space within key commercial developments such as North East Bexhill, the Priory Quarter and Queensway Employment Corridor, which are ready to go and cost competitive within the regional market. ° The evidence gathered that demonstrates the potential for high speed rail to not only speed up the take up of employment space but could actually stimulate further growth and lead to the Core Spatial Strategy targets being revisited towards the end of the decade as noted by local planning officers. Although the targets are aspirational there is a very strong local commitment through the various economic development bodies to ensuring they are deliverable.
This attribution alongside the visitor benefits would result in the following benefits attributable to the rail service for the study area: ° 425 jobs and £19.9m of GVA per annum, equivalent to £269.3m of GVA over a 30 year time horizon2, from employment land utilisation. ° 910 dwellings over the planning period with an associated capital expenditure of £91.0m, creating 67 temporary construction jobs (where a job is expected to last ten years), from housing land utilisation. ° Visitor economy benefits from stimulating overnight trips and increasing the tourism spend of tourism day trips, equivalent to 204 jobs and £7.6m of GVA per annum.
In addition to the land utilisation and visitor economy benefits the agglomeration and supply side impacts of the scheme have been modelled and assessed to amount to £123.7m of GDP over a 60-year appraisal period at a UK level. These benefits relate to agglomeration benefits of £118.9m which values the
2 A 30 year time horizon has been used with an average duration of GVA benefits of 13 years. Although commercial buildings may last longer than 30 years the new businesses locating within them (on the back of the rail scheme) are likely to move on sooner than this and therefore this time horizon is a reasonable assumption. The average persistence of GVA benefits in general is perceived as 10-15 years (for references refer to Impact of RDA Spending, Department for Business Enterprise & Regulatory Reform, March 2009). An average discount rate of 3.5% has been used in line with HM Treasury guidelines
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Economic Case: High Speed Rail to Hastings and Bexhill
extent to which the rail service improves the accessibility of an area to a greater number of firms and workers and labour productivity benefits of £4.9m relating to the benefit the rail service has on labour supply through reducing the cost of travelling and therefore increasing the number of people willing to work at a given wage rate.
Taking into account all benefits assessed for the study area, the high speed rail service could provide regeneration and economic benefits in the range of £354.3m of GVA in total over a 30 year time horizon and 629 jobs per annum (once all benefits are realised). These are significant wider economic benefits considering the scheme is anticipated to cost in the range of £150m.
Table E.1: Summary – quantified economic benefits Area of impact Impacts Study area: Regeneration benefits – per annum (realised fully by 2028) 425 jobs and £19.9m GVA Visitor economy benefits – per annum (realised fully by 2028) 204 jobs and £7.6m of GVA Total regeneration and economic benefits – per annum (realised fully by 2028) 629 jobs and £27.4m of GVA Present value, assuming 30 year time horizon (2015-2044) and 3.5% discount factor £354.3m of GVA UK level: Agglomeration (2010 prices discounted to 2010 using a 60 year appraisal period) £118.9m of GDP Labour supply impact (2010 prices discounted to 2010 using a 60 year appraisal period) £4.9m of GDP Total £123.7m of GDP
Source: Mott MacDonald, excludes temporary construction jobs.
In addition, user benefits will come forward from the conventional economic appraisal of the scheme. These are calculated through journey time savings which are expected to be positive as well.
The table below summarises the benefits identified in a selection of other studies. Overall the level of benefits assessed here compare well and high speed rail services to Hastings and Bexhill demonstrate a good potential range, and scale, of benefits.
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Economic Case: High Speed Rail to Hastings and Bexhill
Table E.2: Comparison to wider economic benefits identified in other studies (rail and other transport) Study title Key findings Economic impact of High Speed 1, Final Attributed 5% of employment land benefits associated with schemes Report, Colin Buchanan (in conjunction with connected with HS1 (in Kings Cross, Stratford, Ebbsfleet and Eastern Voleterra), January 2009 Quarry, which collectively accounted for 87,300 gross jobs). In total £200m of GVA per annum compared to £27.4m per annum figure assessed for this scheme. Given the significant scale of HS1 (£7.3bn cost) compared to this scheme (£150m) the wider benefits identified here are in comparison very high. Bexhill-Hastings Link Road Regeneration Main benefits related to the employment floorspace released at NE Bexhill Statement, April 2007 – approximately 2,000 jobs. This compared to scheme cost of £113m. This is a much higher level of benefit but because the link road will directly open up the North East Bexhill employment land. Wider Economic Benefits of a Rail Service Land utilisation benefits of 161 jobs and £9.0m of GVA per annum against Between March and Wisbech, scheme cost of c£52.6m Cambridgeshire County Council by Mott This is a fairly similar level of return for the total scheme cost. MacDonald, March 2014 Wider Economic Benefits of Improved Rail Land utilisation benefits of 1,150 jobs and £46.0m of GVA per annum. Frequencies, Final Report, Norfolk, Suffolk Total scheme costs not identified and individual routes being brought and Cambridgeshire County Councils by forward for funding currently Mott MacDonald, July 2012
Source: Mott MacDonald
Value for money
The wider economic benefits assessed here substantially strengthen the business case being prepared by Network Rail. The GVA and GDP benefits attributed to the high speed rail scheme and enhanced connectivity substantiate the case for high speed rail and reflect its role in supporting growth and development which builds on the past two decades of regeneration momentum in the study area. The scale of benefits set out above offer a good return on investment of public funds in the scheme.
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Economic Case: High Speed Rail to Hastings and Bexhill
1 Introduction
1.1 Appointment and study team
Mott MacDonald was appointed by East Sussex County Council in conjunction with Rother District Council and Hastings Borough Council to develop a strategic economic case for running high speed rail services from London St Pancras via Ashford along the Marshlink line to Hastings and Bexhill. The study has been undertaken by Mott MacDonald’s Economic & Social Development Team with specialist input from Mott MacDonald’s transport modellers using the Wider Impact of Transport Appraisal (WITA) model. The team has also been supported by Dr James Laird, a specialist in the wider economic benefits assessment of transport schemes.
1.2 Hastings and Bexhill Study Area
1.2.1 Context
The study area covers the local authorities of Rother and Hastings which contain the coastal towns of Hastings and Bexhill and other key settlements such as Battle and Rye. The collective population of the two local authorities is 181,900 persons, representing 34% of the East Sussex total. Like many seaside towns around the UK, Hastings and Bexhill have experienced significant tourism industry decline since the 1960s and as a result deprivation levels are amongst the highest in the UK and comparatively high in a South East context. The study area is in the process of reinventing itself through regeneration activities aiming to attract business investment into new sectors of the economy and upgrade the existing tourism offer. There is real momentum behind regeneration efforts and over £200m of public sector money has already been invested in Hastings and Bexhill through key developments such as the new University Centre, college and commercial developments such as Enviro21 and Priory Quarter creating new employment space.
Despite these successes poor road and rail links mean that the study area has been isolated from the commercial opportunities and markets of Greater London and given the transport improvements in other parts of the region, such as the High Speed One (HS1) rail link in Kent, the area has continued to fall further behind in relative terms over the last two decades. There are less well established links, both commuting and business, with the capital than other areas of East Sussex and the wider South East Local Enterprise Partnership (SE LEP) area3.
3 Covering East Sussex, Essex, Kent, Medway, Southend and Thurrock
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Economic Case: High Speed Rail to Hastings and Bexhill
Figure 1.1: Study Area Context Map
Source: Mott MacDonald
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Economic Case: High Speed Rail to Hastings and Bexhill
1.2.2 Existing rail provision and proposals
Currently, there are three rail services between Hastings and London; the East Coastway line, Hastings – Tonbridge line and the Marshlink line. Network Rail undertook a rail connectivity study4 for Hastings to investigate how rail services could be improved, focusing on journey times to London, Ashford and Brighton (feeding into the Kent Route Strategy currently being developed). The work identified that improvement options on the Tonbridge line had too high a cost for minimal benefit therefore the focus has been on the Marshlink line. The study found that a combined enhancement package, of sending HS1 services (the Javelin trains) from Ashford along a faster Marshlink to Hastings and Bexhill with electrification has a strong business case given substantial journey time savings (see Table 1.1 below) and the improved appeal to passengers and commuters. The total journey time from Hastings to London would fall from over 90 minutes currently to 68 minutes if the Javelin trains were to travel to Hastings and Bexhill.
Table 1.1: Journey time savings from using HS1 services from London St Pancras via Ashford to Hastings /Bexhill Journey Journey time savings London St Pancras-Rye 72-85 minutes to 55 minutes London St Pancras-Hastings 91-100 minutes to 68 minutes London St Pancras-Bexhill 101-112 minutes to 78 minutes
Source: Network Rail
The proposal to send high speed services from Ashford along a faster Marshlink line to Hastings and Bexhill, and stopping at Rye, will not only improve journey times to the capital but also to stops along the route including Ashford International, Ebbsfleet International and Stratford International, opening up the Hastings-Bexhill area to other national and international routes.
*Note on High Speed Rail terminology The scheme being assessed relates to electrifying and modernising the Marshlink line and connecting the track directly to the existing HS1 line at Ashford. HS1 is the dedicated high speed rail route that runs from the Channel Tunnel to St Pancras, which carries Eurostar passenger trains, travelling at up to 180mph, as well as the 140mph Javelin trains from the Southeastern high speed domestic service. The improvements will mean that the Javelin trains can run directly between Bexhill and London St Pancras. Technically, the proposed enhancements are not an HS1 extension or delivery of HS1 for Bexhill and Hastings. HS1 is the high speed rail line that runs between London and the Channel Tunnel. The service will be an extension of the Javelin trains to Bexhill that run on the HS1 route.
1.3 Purpose and scope of study
This study investigates and assesses the strategic economic case for the service enhancements by identifying the potential economic and regeneration benefits. This work will complement the technical case
4 The Future of the Marshlink, Network Rail, March 2014
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Economic Case: High Speed Rail to Hastings and Bexhill
for the scheme that is currently being prepared by Network Rail. More specifically the study investigates the following key areas in order to develop a robust strategic economic case: ° Existing economic need and challenges and regeneration successes – the baseline economic conditions and challenges faced in the study area and how regeneration efforts are addressing these. ° Economic growth aspirations – the growth aspirations at a regional, sub-regional and study area level, given the proposed scheme will significantly enhance infrastructure links between the study area to London and other growth areas across the South East. ° Growth trajectory analysis – the specific growth trajectory planned for the study area including key development sites, assessment of the likelihood of this being achieved and an assessment of the importance of transport interventions such as this scheme towards achieving or even exceeding this trajectory. ° Visitor economy and potential benefits – the potential for the service to contribute towards improving the tourism sector of the study area, attracting further visitors and spend and the associated economic benefits. ° Agglomeration and labour productivity benefits –assessment of the benefits that can accrue from increased concentration of economic activity (agglomeration) that the new improvement service can bring.
These areas have been investigated by the following intertwining strands of analysis: ° Economic context and literature review – relevant economic development and planning documents have been reviewed alongside the existing evidence pertaining to the economic benefits accruing to similar schemes elsewhere. ° Consultation – consultation with economic development and regeneration specialists, business groups, education representatives and the commercial property sector to ascertain views on the strength of the link between the rail investment and future growth in the study area. ° Economic modelling – of the tourism benefits, land utilisation and overall potential economic benefits using Mott MacDonald’s Transparent Economic Assessment Model (TEAM). ° Wider Impacts in Transport Appraisal (WITA) analysis - an assessment of the agglomeration and labour productivity benefits using the WITA model (designed by Mott MacDonald). ° Client Group Discussion – meetings in Hastings with local authority planning, economic development and regeneration specialists at the inception and draft report stages.
Business case process and wider economic benefits This study has been undertaken to support the commercial case for the scheme being prepared by Network Rail. Transport business cases are expected to make use of the Department for Transport’s WebTransport Appraisal Guidance (WebTAG) in a manner appropriate for the project or study. The commercial case is still being developed but will include cost-benefit analysis based on the impacts of the scheme in terms of user benefits (from transport journey savings) and will result in an overall Benefit-Cost Ratio (BCR). This study sits outside of the conventional transport appraisal business case process and provides an assessment of the likely wider economic benefits of the scheme.
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Economic Case: High Speed Rail to Hastings and Bexhill
1.4 Report structure
The remainder of this document is structured as follows: ° Section 2: Economic context. ° Section 3: Economic growth aspirations. ° Section 4: Consultation findings. ° Section 5: Economic and regeneration benefits assessment. ° Section 6: WITA analysis - agglomeration and labour supply impacts. ° Section 7: Key conclusions. ° Appendix A: Planning background and settlement analysis. ° Appendix B: High Speed Rail literature review. ° Appendix C: Consultee list.
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Economic Case: High Speed Rail to Hastings and Bexhill
2 Economic context
2.1 Introduction
This section considers the current economic characteristics of the study area and the wider economic geography to assess the key challenges and opportunities for economic development and growth. The economic data is examined primarily for Rother and Hastings local authority areas against East Sussex, SE LEP area5 and national data. This is important context for understanding how regeneration efforts are tackling these challenges currently and how the scheme can further contribute to transforming the economic fortunes of the study area.
2.2 Population
Hastings and Rother, although below the regional and national averages, have both experienced population growth in the last decade, due to the high levels of inward migration. Population growth has been particularly strong in the SE LEP area reflecting that the Greater South East area (London, the South East and East of England) continues to drive national economic growth.
Table 2.1: Total population change 2000-2013
Total population, 000s Growth 2000/2013 2000 2008 2013 Absolute Annual Hastings 85 89 91 7.2% 0.5% Rother 86 90 91 5.7% 0.4% East Sussex 492 519 534 8.7% 0.6% SE LEP 3,672 3,896 4,052 10.3% 0.8% UK 58,886 61,824 64,106 8.9% 0.7%
Source: Mid-Year Population Estimates, ONS
The population of the study area is comparatively much older than the national average, particularly in Rother where over 30% of the population is over the age of 65 compared to 17.4% nationally. Correspondingly, the working age population (16-64) and younger age cohorts (0-24) in Rother are comparatively very small with implications for the current and future size of the workforce. Hastings in contrast has a much younger population profile broadly in line with the national data.
Table 2.2: Population breakdown, 2013, as % of total 0-15, % 16-24, % 25-44, % 45-64, % 65+, % TOTAL, 000s Hastings 17.4% 12.3% 25.0% 27.0% 18.5% 91 Rother 14.2% 9.8% 17.2% 28.5% 30.3% 91 East Sussex 16.1% 10.8% 21.3% 27.7% 24.3% 534 SELEP 17.7% 12.0% 24.4% 26.3% 19.5% 4,052 UK 17.6% 12.8% 26.7% 25.5% 17.4% 64,106
Source: Mid-Year Population Estimates, ONS
5 Covering East Sussex, Essex, Kent, Medway, Southend and Thurrock
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Economic Case: High Speed Rail to Hastings and Bexhill
The population of Hastings and Rother is concentrated in the two main towns – Hastings and Bexhill – whilst the rest of Rother district is predominantly rural and therefore sparsely populated. Key service centre towns for Rother include Battle and Rye.
Figure 2.1: Population density, persons per hectare
Source: Census 2011, ONS
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Economic Case: High Speed Rail to Hastings and Bexhill
2.3 Employment and economy
2.3.1 Employment6
The total level of employment (see Table 2.3) in Hastings and Rother is 29,900 and 24,900 respectively and collectively the two districts account for 32.7% of total county employment. Employment growth over the boom years (2000-08) was below the national average in both districts but virtually stagnant in Hastings, reflecting the significant structural issues within the economy. Employment across all areas declined following the onset of the recession in 2008 whilst recovery has been more impressive in the study area, particularly Hastings, with employment growing ahead of the SE LEP area.
Table 2.3: Employment 2000-2013 Total employment (workplace based), 2013 2000-08 2008-10 2010-13 Hastings 29,900 0.0% -1.2% 0.5% Rother 24,900 0.5% -1.3% 0.2% East Sussex 167,600 1.0% -0.4% 0.0% SE LEP 1,460,200 0.3% -0.4% 0.2% GB 27,176,500 0.7% -0.1% 0.7%
Source: Business Register and Employment Survey (BRES), Annual Business Inquiry (ABI), ONS
The study area’s economy is dominated by the public sector, retail & wholesale and accommodation & food services (reflecting the tourism industry) (see Table 2.4).
Table 2.4: Employment by broad structure, % of total, 2013 Hastings Rother East Sussex SE LEP GB Agriculture & Mining 0.3% 0.5% 0.9% 1.2% 2.1% Manufacturing 8.9% 5.3% 6.5% 7.3% 8.6% Construction 4.4% 5.4% 5.4% 5.7% 4.5% Retail, wholesale & motor trades 17.4% 15.9% 18.2% 18.5% 16.0% Transport & storage (inc postal) 2.6% 3.0% 2.3% 4.9% 4.5% Accommodation & food services 9.0% 11.9% 9.9% 7.1% 6.8% Information & communication services 1.6% 1.5% 2.3% 2.8% 3.9% Financial & insurance services 2.2% 7.5% 2.7% 2.9% 3.9% Property services 1.4% 1.6% 1.5% 1.5% 1.6% Professional, scientific & technical services 3.4% 4.8% 5.0% 5.6% 7.4% Business administration & support services 4.1% 5.1% 4.8% 8.0% 8.4% Public administration, health & education 40.4% 32.4% 34.9% 29.8% 27.9% Arts, entertainment, recreation & other 4.2% 5.1% 5.6% 4.5% 4.4%
6 Using employee data as a proxy for employment – therefore the totals exclude self-employment.
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Economic Case: High Speed Rail to Hastings and Bexhill
Hastings Rother East Sussex SE LEP GB services TOTAL 100% 100% 100% 100% 100% Professional services total* 8.9% 11.5% 11.2% 15.2% 17.4%
Source: BRES, ONS. Blue shading denotes top 3 sectors. *Covering property services, professional, scientific & technical services and business administration & support services.
The public sector is overrepresented compared to the regional and national averages in the study area and East Sussex, particularly in Hastings where it accounts for 2 in every 5 jobs. This reflects public administration but also a strongly represented health sector. Interrogating the 2010-2013 data further for Hastings also reveals that most of the employment growth noticed in the aggregate figures has been within public services (particularly public administration and residential care activities). This makes the town particularly susceptible to future public sector cuts which are planned over the foreseeable future.
The manufacturing sector is also significant in Hastings, representing 8.9% of all employment, which is the highest of all areas and reflects the noticeable success of local specialisms such as vacuum engineering and contact lens manufacture.
The noticeable trend is the lack of jobs in those professional service sectors of the economy such as professional, scientific & technical services and business administration & support services which are likely to continue to fuel national economic growth. Taking professional services together (ignoring financial & insurance services), the total level of employment in Hastings and Rother is only 8.9% and 11.5% (see Table 2.4) compared to 15.2% and 17.4% in the SE LEP area and UK respectively.
Regeneration efforts in the study area are seeking to address these structural weaknesses through a variety of ways including investment in a modern and competitive commercial property market offer that can attract financial and professional service sector firms to the area. For instance a noticeable success was the attraction of SAGA to locate insurance operations in Hastings in 2011 which has contributed to employment growth over 2010-13.
2.3.2 Wages and economic productivity
The wages, both resident and workplace, of the study area are noticeably lower than the comparator areas, which reflects the current structure of the economy towards lower value activities such as the public sector. It is noticeable that resident wages in Rother are much higher than workplace wages reflecting that many residents commute out of the district for higher paid work. The local authorities in the study area are seeking to address this in a range of ways such as by providing a commercial property market to attract firms to set up within the study area to lower out-commuting and providing more family housing to attract a younger workforce.
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Economic Case: High Speed Rail to Hastings and Bexhill
Table 2.5: Wages - gross full-time median weekly wage, £, 2013 Resident wages Workplace wages Hastings £413 £412 Rother £454 £366 East Sussex £479 £440 SE LEP £525 £475 UK £518 £518
Source: Annual Survey of Hours and Earnings, ONS
Given these wage differentials, East Sussex (and therefore the study area) does have a weak economy relative to the South East as a whole with economic productivity (Gross Value Added (GVA) per worker) being approximately £46,800, compared to £53,600 in the South East as a whole7. This stems from the structural weaknesses within the economy and that currently there is less employment in those sectors driving UK economic growth such as professional services.
2.4 Labour market
2.4.1 Economic activity and skills
The economic activity rates within the study area at 74.9% and 72.4% in Hastings and Rother respectively, are very low compared to the county and regional averages. The underlying reasons for economic inactivity are quite different in the two areas – in Rother there is a high level of retired persons and in Hastings there is a high proportion of persons looking after family/home and suffering from long term sickness.
7 Using Headline GVA by NUTS 3 areas and total employee data, both for 2012.
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Economic Case: High Speed Rail to Hastings and Bexhill
Figure 2.2: Economic activity rates, 16-64 cohort, 2014
Economic activity rate 16-64 Economic inactivity rate 16-64
UK 77.3 22.7
SE LEP 78.5 21.5
East Sussex 79.0 21.0
Rother 72.4 27.6
Hastings 74.9 25.1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Annual Population Survey, data refers to period July 2013-Jun 2014
The level of unemployment is much higher in Hastings at 4.5% compared to 3.2% nationally reflecting the underlying long term economic inactivity issues within the labour market. In comparison Rother has a very low unemployment level and the largest source of economic inactivity is retirement.
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Economic Case: High Speed Rail to Hastings and Bexhill
Figure 2.3: Unemployment rate (claimant count), 2000-2013
Hastings Rother East Sussex SE LEP UK
6.0
5.0
4.0
3.0
2.0 % % of residents aged16-64
1.0
0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Claimant Count, ONS
The skills of the population in Hastings are significantly lower than the regional and national averages (see Figure 2.4) with over 13% of the total population aged 16-64 with no qualifications compared to 9.5% nationally whilst only 47.0% of the cohort are qualified NVQ3-4+ compared to 52.0% nationally. In contrast Rother has the highest proportion of highly skilled persons of all areas with 52.5% of the cohort qualified to NVQ3-4+.
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Economic Case: High Speed Rail to Hastings and Bexhill
Figure 2.4: Educational achievement of the population aged 16-64, 2013
% with NVQ4+ - aged 16-64 % with NVQ3 only - aged 16-64 % with Trade Apprenticeships - aged 16-64 % with NVQ2 only - aged 16-64 % with NVQ1 only - aged 16-64 % with other qualifications (NVQ) - aged 16-64 % with no qualifications (NVQ) - aged 16-64
Hastings 32.1 14.9 3.4 15.8 12.9 7.8 13.0
Rother 33.2 19.0 2.3 19.7 13.2 3.6 8.9
East Sussex 32.4 18.4 3.4 16.8 13.5 5.3 10.1
SE LEP 30.1 17.7 3.4 19.8 14.9 5.6 8.5
UK 35.0 17.0 3.6 16.7 11.9 6.2 9.5
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Source: Annual Population Survey, Jan 2013-Dec 2013
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Economic Case: High Speed Rail to Hastings and Bexhill
2.4.2 Economic geography - travel to work patterns
Of the 59,300 journeys to work made from the study area approximately 72% are within the study area. Some 28% of persons travel outside Hastings and Rother for work opportunities, demonstrating that the two districts are economically co-dependent.
Table 2.6: Travel to work summary, 2011 Area of residence Hastings Rother Study area Total journeys made to work 32,101 27,173 59,274 Total journeys made to (%): Hastings 63% 19% 43% Rother 16% 45% 29% Study area 79% 63% 72%
Source: 2011 Census
As shown in Figures 2.5-2.8 overleaf there is a strong pattern of out-commuting to areas including neighbouring districts, Eastbourne and Wealden and Tunbridge Wells. The City of London is the next largest location (by district) with total journeys to work from the study area standing at 1,200 in 2011 (2% of all journeys). Other districts within the travel to work area for the study area include Lewes, Ashford and Brighton & Hove (although individually they account for only around 1% of total journeys to work).
Since 2001 the level of out-commuting has increased from the study area from approximately 20% of all journeys to work to 28% in 2011. There has also been a noticeable increase in the journeys to work made into London with more journeys to the City of London reflecting the regional trend (see Section 3 for further analysis).
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Economic Case: High Speed Rail to Hastings and Bexhill Final Report
Figure 2.5: Travel to work journeys from the study area, 2001
Source: 2001 Census
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Economic Case: High Speed Rail to Hastings and Bexhill Final Report
Figure 2.6: Travel to work journeys from the study area, 2011
Source: 2011 Census
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Economic Case: High Speed Rail to Hastings and Bexhill Final Report
Figure 2.7: Travel to work journeys into the study area, 2001
Source: 2001 Census
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Economic Case: High Speed Rail to Hastings and Bexhill Final Report
Figure 2.8: Travel to work journeys into the study area, 2011
Source: 2011 Census
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Economic Case: High Speed Rail to Hastings and Bexhill
2.5 Deprivation
In common with a number of coastal areas in the UK, the study area, particularly Hastings, has suffered from several discouraging economic trends in the recent past which have meant that there are significant levels of multiple deprivation. Hastings is ranked as the third most deprived English seaside destination8 and Hastings district is the 19th most deprived out of a total of 326 in England. Deprivation is widespread and this is reflected in the fact that of the 53 Super Output Areas in Hastings, 15 of these neighbourhoods fall within the worst 10% in England and a further 9 rank in the worst 20%.
Figure 2.9: Deprivation 2010
Source: Indices of Deprivation 2010
The severe deprivation in Hastings is closely linked to the decline of the visitor economy which has seen the inward migration of lower income residents, often dependent on benefits and including some with drug
8 A Profile of Deprivation in Larger English Seaside Destinations, 2007 and 2010, ONS, August 2013, p.14
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Economic Case: High Speed Rail to Hastings and Bexhill
and alcohol problems, and ex-offenders into holiday accommodation previously used by the tourism sector. In Bexhill, deprivation is not as severe with a higher influx of more prosperous retirees. Figure 2.10 demonstrates this vicious circle of selective migration and the interaction between severe deprivation and a lack of jobs and economic growth.
Figure 2.10: The Vicious Circle of Historic Patterns of Selective Migration
Source: Wessex Economics, Coastal Towns Private Rented Sector Initiative, 2013
2.6 Economic outlook
2.6.1 Population projections
The total population of the study area is projected to increase by 24,300 persons over 2012-2031 to reach 205,700 persons by 2031. This is an annual rate of growth of approximately 0.7% and mirrors the strong population projection across the SE LEP area, which is above the national growth projection.
Table 2.7: Population Projections 2012-2031 (in 000s) Population % change 2012-2021 % change 2021- 2031 Projections 2012 2021 2031 (CAGR) (CAGR) Hastings 90.3 95.2 101.4 0.6% 0.6% Rother 91.1 96.5 104.3 0.6% 0.8% East Sussex 531.2 564.0 605.0 0.7% 0.7% SE LEP 4,020.4 4,316.7 4,651.2 0.8% 0.7%
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Economic Case: High Speed Rail to Hastings and Bexhill
Population % change 2012-2021 % change 2021- 2031 Projections 2012 2021 2031 (CAGR) (CAGR) England 53,493.7 56,962.1 60,418.8 0.7% 0.6%
Source: Mid-Year 2012 Based Population Projections, ONS
The elderly population in both Hastings and Rother is forecast to grow significantly over the next two decades with the 65+ population projected to increase their share of the total population by 6.6% and 8.1% respectively by 2031.
Table 2.8: Population projections by age breakdown, as % of total population Hastings Rother 2012 2021 2031 Total pp 2012 2021 2031 Total pp change change 2012-31 2012-31 0-14 17.2% 17.7% 16.9% -0.3% 14.4% 14.7% 13.9% -0.5% 15-24 12.7% 10.5% 11.0% -1.7% 9.8% 7.9% 8.2% -1.5% 25-44 25.2% 24.5% 23.2% -2.0% 17.5% 16.3% 15.5% -2.0% 45-64 26.9% 26.7% 24.2% -2.6% 28.7% 28.1% 24.6% -4.1% 65+ 18.0% 20.5% 24.6% 6.6% 29.6% 33.0% 37.7% 8.1% TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Working age 64.8% 61.7% 58.5% -6.3% 56.0% 52.3% 48.4% -7.7% population
Source: Mid-Year 2012 Based Population Projections, ONS
The level of inward migration is set to account for all the population growth over 2012-31 in Rother whilst natural change is forecast to be negative (given the older population profile). This presents significant challenges for economic development given the demands on public services of an ageing population and highlights the need to attract younger families to migrate into the area to balance out the demographic profile.
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Economic Case: High Speed Rail to Hastings and Bexhill
Figure 2.11: Components of population change, 2012-2031, absolute growth
Cross-border migration net Net international migration Net internal migration Natural change
Hastings
Rother
East Sussex
South East Region
England
-100% -50% 0% 50% 100% 150% 200%
% of total population change 2012-31
Source: Mid-Year 2012 Based Population Projections, ONS
Importantly, these projections from ONS are purely trend based and therefore do not take on board any policies designed to attract younger persons to the area which is a key goal of economic development and regeneration initiatives. As detailed in the following section both local authorities in the study area are seeking to ‘better balance’ their population profile through regeneration and economic development planning such as encouraging families to reside to the area and stimulating business growth and inward investment.
2.6.2 Workforce projections
The Hastings and Rother Employment Land Review and Update 2011 provides workforce projections based on demographic trends and house building rates which are summarised below for Hastings and Rother. These projections, similar to the ONS population projections, are based on the current population structure and past patterns of migration, as well as prevailing economic activity rates. Given the historical population trends the workforce is projected to decline over the period as Table 2.9 illustrates.
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Economic Case: High Speed Rail to Hastings and Bexhill
Table 2.9: Workforce projections, 2001-2028 Total Total change change 2008- 2008- 2001 2008 2013 2018 2023 2028 2023 2028 Hastings 37,190 38,590 38,590 37,852 36,792 35,752 -1,798 -2,838 Rother 33,109 34,960 34,151 32,873 31,336 29,464 -3,624 -5,496 Hastings and Rother 70,298 73,549 72,741 70,725 68,128 65,216 -5,421 -8,333 Source: Hastings and Rother Employment Land Review and Update 2011
Clearly as these projections do not take account of policy shifts, including the provision being made for employment creation and family housing that are intended to alter the characteristics of in-migration, the approach has been to plan for a greater workforce, particularly for Rother District. Therefore the following workforce projections (Table 2.10) can be considered a policy-on scenario which takes account of such policy and assumes an increase in economic activity rates and reduction in net out-commuting. Overall the total workforce is projected to increase by 11,600 over 2008-2028. These projections are further considered within the growth trajectory analysis in Section 5.
Table 2.10: Workforce projections 2001-2028 based on policy, economic activity and commuting assumptions Total change 2008- 2008 2018 2028 2028 Hastings 33,380 38,811 39,849 6,469 Rother 30,240 34,579 35,367 5,127 Hastings and Rother 63,620 73,390 75,216 11,596 Source: Hastings and Rother Employment Land Review and Update 2011
2.7 Visitor economy
2.7.1 Key visitor attractions
The study area has a rich cultural offer for tourists with the focus being on the following by location: ° Rother – key attractions include the area’s arts and culture, history and heritage, seaside (notably Camber sands east of Rye), literature connections, events, gardens and local crafts/produce. Over 82% of Rother District falls within the High Weald Area of Outstanding Natural Beauty (AONB) – a landscape of natural importance (designated an AONB in 1983). – Bexhill – offers the seafront but also a strong cultural offer provided by De la Warr Pavilion which contributes to the both the profile of the town and to the local economy, highlighting the value of good links between the town centre and the seafront. – Rye – offers an abundance of high quality hotels and guest houses located within the town itself with the main attraction being the town’s historic core and the surrounding countryside. The town boasts a high cultural offer, including a number of annual festivals, such as the high-profile Rye Arts Festival and the Rye Bay Scallop Festival, a strong arts and literary community, with several art galleries, and the long tradition of the Rye potteries.
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Economic Case: High Speed Rail to Hastings and Bexhill
– Battle – is a popular tourist destination for domestic and foreign visitors given the historic town centre, including historic Battle Abbey and designated historic battlefield site. The whole town and the immediate surrounding countryside are within the High Weald Area of Outstanding Natural Beauty (AONB). ° Hastings – key attractions include the seafront which is the focus of much of the town’s cultural activity, the beach-based fishing fleet, the new Jerwood Art Gallery and the Victorian Pier which is being restored following a fire. There have been significant improvements along the Seafront including restoration of the Marina Pavilion and installation of a multi-use games area and volleyball court along the promenade. The core of activity is now concentrated in the Stade/Old Town area and beaches nearby. The recent major investment in the Jerwood Gallery and related facilities is serving to consolidate the tourist role of the area and broaden its appeal to a different sector of the visitor market.
2.7.2 Employment levels
The visitor market arguably remains the bedrock of the study area’s economy given the coastal offer and historical and archaeological interest linked to the 1066 Battle of Hastings. Using a wider definition of the tourism and cultural industry9 (than just accommodation and food services mentioned above) the latest employment data from BRES shows that the sector accounted for 11.2% (3,400 persons) and 14.4% (3,600 persons) of total employees in Hastings and Rother respectively in 2013. The tourism studies undertaken by Rother and Hastings estimate that the total number of FTEs supported by tourism activities (direct, indirect and induced) is even higher at approximately 5,300 and 6,400 respectively10.
The tourism industry provides a range of ‘entry-level jobs’ which are often seasonal supported by a smaller number of professionals, which will remain important to the local economy. However, it must be recognised that it is unlikely to generate enough of the higher value-added jobs that, combined with a higher skilled workforce, will bring about sustainable regeneration on its own. However, the tourism and wider cultural offer has a greater role to play in terms of enhancing the study area as a place to live and visit.
2.7.3 Visitor numbers and spending
The total levels of visitors to the study area, using the figures from Tourism South East, are 906,000 overnight trips and 8.8m day visitors per annum11. This differs to the Visit England figures which report 651,000 overnight trips and 4.4.m tourism day visits in 2012 for the study area12. The Tourism South East figures do use the Visit England tourism survey totals at a regional and county level but disaggregate these using the Cambridge Model, which incorporates a wider range of local data to improve accuracy.
9 Including accommodation and food services, activities of travel agencies and reservation services, sports activities, museum and other attractions and artistic related activities. 10 Economic impact of Tourism Rother 2009 (referred to in core strategy) and Economic Impact of Tourism Hastings 2013, Tourism South East Research 11 Using Economic Impact of Tourism 2012 Hastings and Economic Impact of Tourism 2012 Rother, both by Tourism South East. 12 Using the rolling LA averages for overnight domestic visitors from Great Britain Tourism Survey and for Tourism day visits from the GB Day Visits Survey 2013. Inbound overnight visits from the International Passenger Survey are not available at LA level and therefore the totals for Hastings and Rother are estimated using from the East Sussex total once accounting for overnight trips made to Brighton.
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Economic Case: High Speed Rail to Hastings and Bexhill
Table 2.11: Visitor numbers and spending in study area, 2012 Hastings Rother Study area Expenditure, Expenditure, Visits, Expenditure, Visits, 000s £m Visits, 000s £m 000s £m Domestic overnight visits 368 £59.6 430 £70.1 798.0 £129.7 Inbound overnight visits 54 £26.4 54 £22.9 108.0 £49.3 Day trips 3,108 £94.9 5,672 £141.3 8,780.0 £236.2 Total 3,530 £180.8 6,156 234.3 9,686.0 £415.1
Source & Notes: Figures taken from Tourism South East who use the following tourism surveys: Overnight domestic – Great Britain Tourism Survey Inbound overnight –International Passenger Survey. Tourism day visits – GB Day Visits Survey 2013. Tourism day visit refers to internationally recognised definition which fulfils a number of criteria including participation in one of fifteen leisure activities, lasts at least three hours and is not an activity that is undertaken ‘very regularly’.
In total the 9.7m visitors to the study area spent £415.1m during their visit. Although tourism day trips account for the vast majority of visits, at 91%, they only account for 57% of tourism expenditure demonstrating the importance of overnight tourism. Indeed average spend from overnight inbound visitors is £461 in the study area – demonstrating that if the study area could market itself more effectively towards overnight visitors, particularly as an inbound tourism destination, this would uplift visitor expenditure significantly. The average spend per trip figures for the study area compared to the South East and national figures are fairly favourable in terms of overnight visits but noticeably lower for tourism day visits.
Table 2.12: Average spend per trip, 2013 East Sussex South East England (excluding Study area London) Domestic overnight visits £162.5 £167 £148 £181 (£173) Inbound overnight visits £456.0 £453 £436 £643 (£523) Day trips £27 £39 £32 £34 (£33)
Source: Tourism South East, using sources noted under Table 2.11, figures for East Sussex and South East relate to latest 2013 figures. For study area 2012 figures compared.
In Hastings, it is also worth noting the importance of language schools (which should be captured in the data above) which play a major role in the local economy, with an annual visitor spend of £35m, from approximately 35,000 students, mostly staying for short periods with local host families thus putting money very directly into the local economy13.
Visit England also publishes a survey on the key attractions (although this does not capture all attractions depending on who participates) by local authority. As shown in Table 2.13 below key attractions besides those mentioned above include Bodiam Castle, Fishermen’s Museum and the 1066 Battle Abbey &
13 Shaping Hastings, Core Strategy, 2014
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Economic Case: High Speed Rail to Hastings and Bexhill
Battlefield. There is clearly a rich tourism and cultural offer within the study area that if positioned correctly through improved connectivity could lead to further visitors and visitor expenditure.
Table 2.13: Key attractions and visitor numbers, 2013 Attraction District Category Visitors, 2013 Bodiam Castle Rother Historic Properties 160,890.0 Fishermen's Museum Hastings Museums & Art Galleries 129,189.0 1066 Battle Abbey and Battlefield Rother Historic Properties 113,396.0 Batemans Rother Historic Properties 91,418.0 Shipwreck Museum Hastings Museums & Art Galleries 78,659.0 Great Dixter House and Gardens Rother Historic Properties 43,774.0 Hastings Museum and Art Gallery Hastings Museums & Art Galleries 39,157.0 Old Town Hall Museum Hastings Museums & Art Galleries 27,375.0 Pashley Manor Gardens Rother Gardens 26,799.0 Carr Taylor Vineyard Rother Workplaces 22,600.0 Bexhill Museum Rother Museums & Art Galleries 10,629.0 Brede Steam Engine Society - The Giants of Brede Rother Workplaces 6,000.0 Sedlescombe Organic Vineyard Rother Workplaces 5,000.0
Source: Great Britain Day Visits Survey, Visit England
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Economic Case: High Speed Rail to Hastings and Bexhill
2.8 Summary
• The population of the study area has grown strongly over the last decade due to high levels of inward migration of retired persons (especially in Rother) and economically inactive persons (especially in Hastings). In Rother the working age population (16-64) and younger age cohorts (0-24) are comparatively very small with implications for the current and future size of the workforce. These trends are being addressed by economic development policy which is seeking to attract younger persons to the area through stimulating business growth and thereby attracting more families. • The economy of the study area is dominated by the public sector which accounts for 2 in every 5 jobs in Hastings. The tourism industry is still a significant employer whilst the area is significantly underrepresented in private sector services that are dominant in London and the South East and are set to drive national economic growth. Significant diversification towards higher value activities is required to support economic growth which is being addressed by initiatives to improve the commercial property market offer and attract inward investment. • Economic participation is very low in the study area. In Rother’s case this is due to the high level of retired persons whilst in Hastings this is rooted in high levels of social exclusion in the labour market. Unemployment is very high in Hastings with a high proportion of the workforce having no qualifications. • Given these characteristics Hastings has severe pockets of deprivation with economic and social challenges deeply rooted in economic history, namely the decline of the seaside tourism in the 1960s. The lack of business investment and job opportunities has resulted in outward migration of younger and skilled residents and relatively low demand for housing. A process of selective migration has been taking place with the in-migration of retired persons and of the economically in-active (and benefit dependent) which furthers deters investment and the attraction of higher income groups. Under investment in strategic infrastructure linking the area to key areas of economic growth in London and Kent has also constrained labour market mobility. • The travel to work area for the study area is relatively self-contained although net out-commuting and journeys to London have increased over the last decade. Increasing population and economic pressures on London as it rapidly grows is likely to lead to further in-migration to surrounding areas in the SE LEP area, including Hastings and Bexhill. Clearly enhanced transport connections, such as through High Speed Rail, to the capital will further enhance this trend. • The visitor economy is very important to the study area which offers a rich and developing cultural offer. There are 9.7m visitors per annum (911,000 overnight visitors) bringing tourism expenditure of £422.5m into the local economy. The tourism and cultural industry directly supports around 7,000 employee jobs but taking account of indirect and induced multiplier impacts the total jobs supported is closer to 11,700 in the study area (over 21% of total jobs).
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Economic Case: High Speed Rail to Hastings and Bexhill
3 Economic growth aspirations
3.1 Introduction
This section provides an overview of the key economic growth context of London and the South East, the SE LEP area and the study area itself. This is important since high speed services to Hastings and Bexhill will provide a direct and improved transport link to the growth opportunities that are driving national economic growth and economic development policy at a sub-regional level, particularly the scale of growth envisaged in the capital and the SE LEP transport growth corridors/areas. Furthermore, the scheme has strong potential to enhance past and current regeneration efforts and strengthen economic growth prospects for the study area.
3.2 London and its surrounds - the big picture
The South East and London economies will continue to drive national economic growth over the coming decades. Employment in London, using GLA projections, is projected to increase form 4.9m in 2011 to 5.8m in 2036 - 850,000 more jobs in London by 203614 with the majority of growth within high value added and highly skilled professional and business support services. The populations of London and the South East between the two last Censuses (2001-2011) grew by 12% and 8% respectively and are set to continue growing year on year fuelled by immigration and rising birth rates, placing further pressure on house prices. As highlighted in the London Infrastructure Plan 205015, the central agglomeration of jobs in central London is likely to continue, despite the growth in mobile and remote working enabled by technology. This physical clustering means that sustaining growth of the centre and good access to it remains the strategic economic priority for London’s foreseeable future.
In 2001 total UK journeys to work into London (region) were 14.4% of the total and by 2011 they had increased to 15.4% (Source: Census 2001 and 2011). In 2011, those that lived and worked in London were supplemented by almost 800,000 commuters into the capital, equivalent to around 16% of jobs in London – an increase of around 100,000 over the last decade or so16.
It is likely that in the future more and more people will choose to travel to work in London as they move out of the capital and seek more affordable homes outside in less densely populated and/or more affordable locations. Over time the ring of journeys to work around London is likely to get even larger and areas such as Hastings and Rother will become more attractive as locations to live in and commute to London from. Indeed, the London Infrastructure Plan highlights the importance of faster and higher capacity links to an expanding labour market beyond London and its traditional commuter belt, such as Hastings through upgraded rail links. Figure 3.1 shows the travel to work flows into London from the 2011 Census and clearly shows the concentration of Greater London workers that live to the north and northeast of Greater London in counties and settlements that have good transport connectivity into central London. Conversely, the relatively poor connectivity to the south of London is illustrated by the much lower concentrations of
14 London Labour Market Projections, GLA Economics, April 2013 15 London Infrastructure Plan 2050, Mayor of London, Consultation Draft, October 2014 16 London Labour Market Projections, GLA Economics, April 2013
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Economic Case: High Speed Rail to Hastings and Bexhill
commuters over the same distance from central London (although the area to the south is also less densely populated too).
Figure 3.1: Travel to work flows into London from South East and East of England regions (excluding internal London trips), 2011
Source: Mott MacDonald, excludes internal London Journeys, modelled at Middle Super Output Areas
Businesses within the SE LEP area currently supply a wide range of goods and services to the capital in various sectors such as logistics, the creative industries, manufacturing and a range of back office functions. In the 21st Century the Thames Gateway and the South East LEP area as a whole will be London’s premier expansion location and the prospects for sectors linked to the London economy are strong. Population growth in the SE LEP area is partially predicated on net-in migration from the capital which will be an important component driving overall economic growth. Hastings and Bexhill have the potential, through better transport links to the capital, to benefit from these trends.
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Economic Case: High Speed Rail to Hastings and Bexhill
3.3 SE LEP growth ambitions and areas17
The SE LEP area is home to the nation’s largest concentrations of ports, transport and logistics firms, advanced manufacturing companies and has strong clusters of companies in life sciences, creative & cultural industries, health, land based industries and tourism.
In light of this the key ambitions for the SE LEP are to achieve the following by 2021: ° Generate 200,000 private sector jobs, increase of 11.4% since 2011. ° Complete 100,000 new homes. ° Lever investment totalling £10 billion, to accelerate growth, jobs and homebuilding. ° Invest in the Thames Gateway and the Coastal Communities in the area to further contribute to the growth of the London economy and also to address the challenges faced by coastal communities.
The key strands of the LEP’s Strategic Economic Plan (SEP) are to build on the area’s existing strengths and address key challenges faced under a number of key areas which are summarised below in Table 3.1:
Table 3.1: SE LEP SEP: Key strands and action areas Key strand Issues addressed Key actions Boosting • Comparatively low productivity per • Across all actions Productivity head in South of England given further away from London and has struggled to diversify from traditional industries (coal, paper, aggregates and low value tourism). Building More • Need to build more houses each • Allocating sufficient land for residential development in Houses and Re- year across the area and to rebuild local plans. Building confidence in housing markets in • Bringing forward land in public ownership for Confidence many coastal areas. Population residential development. projected to grow significantly • requiring c.20,000 new houses per Restore / build capacity in the development industry. annum. • Develop new delivery models for financing and sharing • In coastal areas a dysfunctional risk and rewards. private rented housing sector is • Bespoke, co-ordinated programmes of investment to currently holding back economic enable coastal communities to generate the returns on regeneration. opportunities for enterprise and employment, culture and visitor enjoyment that their location, environment and heritage provide. Improving Skills • Skill needs of priority sectors not • Enhancing skills to enable companies to expand, being met and STEM shortage for encourage new start-ups and to attract investment. existing sectors. Compared to SE lower than average levels of 4+ skills, low levels of basic literacy and numeracy, and high levels of worklessness, with particular area concentrations.
17 Drawing on the SELEP’s Growth Deal and Strategic Economic Plan, which sets out the LEP’s local growth strategy and the proposals and plans set out form the basis of the LEP’s growth deal with government.
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Economic Case: High Speed Rail to Hastings and Bexhill
Key strand Issues addressed Key actions Investing in • To enable strategic focus of • 12 key growth corridors/ areas in the entire SE LEP Transport investment resources on schemes area, which are visually displayed below in Figure 3.1. Growth considered to deliver most growth. This will enable to prioritisation of specific transport Corridors/Areas and other infrastructure schemes.
Source: South East LEP: Growth Deal and Strategic Economic Plan
3.3.1 Growth Corridors / Areas
The key growth corridors are those areas identified as presenting the greatest opportunity for growth across the SE LEP area and thereby requiring focused investment in infrastructure. These are visually shown below in Figure 3.2 alongside analysis of those key locations and opportunities that will be directly linked to the study area via the proposed high speed rail service to/from Bexhill and Hastings.
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Economic Case: High Speed Rail to Hastings and Bexhill Final Report
Figure 3.2: Transport Growth Corridors / Areas
A2/M2 Thames Gateway Kent – Includes some of the UK’s most important locations for growth which will now be directly linked to Hastings and Bexhill including:
- Ebbsfleet Garden City – planned housing project between Ebbsfleet International and Bluewater planned to create 20,000 jobs and deliver 15,000 homes. - Major theme park and visitor destination planned nearby at Swanscombe Peninsula offering the prospect of a further 27,000 jobs.
M20 London- Maidstone – Ashford – Ashford is central to the economic expansion of East Kent and is set to expand over the next decade more than any other Kent district. Over 2001 and 2011 more than 7,500 jobs created and this rate is set to continue, underpinned by creation of new Garden City. Several key developments including Ashford Commercial Quarter (adjacent to Ashford International) – major office and retail development – and Ashford International College.
Source: South East LEP: Growth Deal and Strategic Economic Plan, Mott MacDonald
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Economic Case: High Speed Rail to Hastings and Bexhill
3.4 Growth ambitions of the study area
3.4.1 Economic development policy
Regeneration has been the key cornerstone activity for both Rother and Hastings Borough Council respectively for many years. Despite many challenges both authorities are forward thinking in terms of working with strategic partners to maximise development opportunities in the area. There have been many successes and incrementally the work undertaken by various bodies in public, private and voluntary sectors in the last decade has slowly changed the public perception of the area within and beyond the traditional catchment of Bexhill and Hastings.
In 2002 the Hastings and Bexhill Taskforce was established, through which the regeneration company ‘Hastings and Bexhill Renaissance Ltd’ (trading as SeaSpace and now known as SeaChange Sussex) operated and received £34m of government grants to implement its ‘Five-Point Plan’. The ‘Five-Point Plan’ addressed the following themes: urban renaissance, excellence in education, business development, transport improvements and broadband connectivity. The Five Point Plan has since been reworked to the Six Point Plan to include ‘Image’ to tackle robustly any perceived negative messages about Bexhill and Hastings and promote the area as an outstanding opportunity to do business and offering a high quality of life. SeaChange Sussex is continuing with the delivery of major capital regeneration projects such as the provision of strategic employment land and infrastructure at NE Bexhill and Queensway Industrial Park in Hastings.
The Task Force remains as an informal partnership of key stakeholders, including local authorities, businesses, HE & FE providers and voluntary sector organisations, ensuring that the activities of partners are aligned with local priorities and providing a joined-up approach to representations to the SELEP Board via Team East Sussex regarding priorities. Of note to date there has been significant investment in both Hastings and Bexhill including for example: ° the completion of a new university; further education (FE) college developments; ° completion of the award winning £10m cultural flagship project centred on the iconic De La Warr Pavilion which has assisted in stimulating the arts and cultural industries; ° new office accommodation within the town centre of Hastings; ° the development of incubator and start-up business centres focused on the creative media industry; ° the ‘environmental business corridor’ on the local authority boundaries of Hastings and Rother; ° £5m refurbishment of the West Parade seafront and Colonnade ‘Next Wave’ project to complement the £2m new extension and refurbishment investment in the Bexhill Museum; ° the ‘Heritage Economic Regeneration Scheme’s’ (HERS) £670,000 investment in both the built fabric and the public realm of Bexhill town centre; ° the £2.5m re-development of the derelict Sidley railway goods yard, providing employment space in the heart of Bexhill’s deprived wards for start-up businesses which has become fully occupied within two years of opening in 2010; ° the award winning £1m refurbishment of Egerton Park to create an innovative urban play space in the heart of Bexhill;
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Economic Case: High Speed Rail to Hastings and Bexhill
° capital improvements to the town centres in the study area; ° new FE colleges built in Hastings and Bexhill; and, ° a £38m Bexhill high school funded through the ‘Building Schools for Future’ programme opened in 2010.
In summary the key elements of economic development policy from a county to local level relate to addressing those policy areas outlined in Table 3.2, which are perhaps best captured by the action areas of the Six Point Plan, which guides economic regeneration (Figure 3.3).
Table 3.2: Economic development policy principles Policy area Key details Creating a more • Addressing the overreliance on low-value added sectors and the public sector diverse economy • Focus on interventions that assist emerging growth sectors such as health care & serviced accommodation, high value tourism, digital media, advanced manufacturing & emerging technologies and other knowledge based businesses. Skills - raising • Addressing high levels of worklessness in Hastings, Bexhill and Rye, through addressing aspirations and the barriers to work. skills base Connectivity • Specific need to improve the quality and standard of train services in terms of capacity – especially east-west movement along the coastal corridor and connectivity between the coastal towns, particularly regional hub of Hastings to Ashford and London. • Well recognised that the polarisation between the more deprived areas of East Sussex such as Hastings and the rest of the country is largely due to poor levels of connectivity (as well as a heavy reliance on the public sector for employment). Commercial • Need to focus on key development sites including Hastings town centre, the A21 corridor premises – upgrade (Enviro 21) and N/NE Bexhill that can improve the employment space offer. provision Improve the • Address particular housing market problems such as the link between rented tenure and high housing choice and levels of deprivation in Hastings. availability • In Rother the problems are different in nature with an inadequate supply of affordable housing meaning many younger people leave the area which has reinforced the older population profile. Improve the visitor • Promote the area as a key destination for visitors by developing a strong coordinated high profile and enhance quality offer with benefits to local economies and one which promotes cultural sites already the quality of offer renowned including Jerwood Gallery and De La Warr Pavilion. • An important aspect is continuing to regenerate the seafronts and town centres at Bexhill and Hastings, focusing on redevelopment or improvement of sites and premises that are important to the area’s economy, including tourism, leisure and cultural regeneration. Image and profile • Address the negative impacts of Hastings as a dilapidated seaside resort and Bexhill as a place to retire need to be addressed to encourage inward investment • This includes actions to promote a positive image for the area as a desirable and affordable business location, targeting those sectors which will help to diversify the employment base and support growth in the key sectors.
Source: Various including the East Sussex Economic Development Strategy 2012, Rother’s Economic Regeneration Strategy 2010- 15 and the Hastings and Bexhill Task Force Six Point Plan and the core strategies
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Economic Case: High Speed Rail to Hastings and Bexhill
Figure 3.3: Hastings Bexhill Six Point Plan
Urban Renaissance
Image Transport Economic Regeneration Hastings and Bexhill Task Force Six Point Plan Enterprise Skills growth
Broadband
Source: Hastings and Bexhill Task Force Six Point Plan
3.4.2 Growth targets
The Rother Local Plan: Core Strategy and Shaping Hastings - The Hastings Planning Strategy 2011 – 2028 set out the planning strategies for both boroughs over 2008-2028. Both strategies were informed by the Hastings and Rother Employment Land Review and Update 2011 which provided the basis for the floorspace estimates through its labour supply and demand analysis. The workforce projections behind the core strategies was reviewed in the previous section – overall through active policy intervention the total jobs growth over the planning period was established as 11,600 jobs (5,100 in Hastings and 6,500 in Rother). In business floorspace terms this translates into a gross floor space requirement of 100,000m² and 70,000m² for Rother and Hastings respectively.
Table 3.3: Rother and Hastings - approximate development levels 2011-2028 Housing Employment (B-use employment space) Rother – total At least 5,700 dwellings 93,000 – 103,000m² Hastings – total At least 3,400 net additional dwellings Up to 70,000 m²
Source: Rother Local Plan: Core Strategy, Shaping Hastings
Appendix A provides an overview of the key planning policies for Rother, Hastings, key settlements and the tourism industry, which has been important context for this study.
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Economic Case: High Speed Rail to Hastings and Bexhill
3.4.3 A21/A259 Hastings Bexhill Growth Corridor
The A21/A259 Hastings Bexhill Growth Corridor is one of 12 growth corridors/areas identified by the SE LEP (see Figure 3.2) and is explored in further detail in Figure 3.4 below. The corridor extends northward up to the A21 towards Tunbridge Wells and London, and eastward along the A259 towards Rye, Ashford and the continental ports and contains the major opportunity sites for investment (summarised in Table 3.4). The growth deal with government has secured funding for the proposed transport schemes along the corridor, which include a variety of junction improvements, access roads, bus improvements and other schemes. The rail scheme proposed is clearly an important transport improvement part of a wider set of interventions needed to address the relatively poor infrastructure in the study area. It is also worth noting that apart from improvements to the A21 (Pembury-Tonbridge dualling) there are no improvements to the strategic corridors (road or rail) planned in the study area over the next decade.
Figure 3.4: A21/ A259 Hastings Bexhill Growth Corridor – key development sites
Source: Various, Mott MacDonald
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Economic Case: High Speed Rail to Hastings and Bexhill
3.4.4 Key development opportunities
There are a number of key developments underpinning the regeneration plans for the study area and the achievement of the growth targets identified within SE LEP growth corridor and strategic planning for the area, most of which are picked up in Figure 3.4 above.
The key details have been summarised below in Table 3.4 which are based on the core strategies for Hastings and Rother, other supporting documentation and from further clarification gained during the study’s consultation process. There is a strong local commitment to reversing the area’s economic fortunes not only through enhancing the employment land provision but also policies that will simultaneously improve the connectivity, image and perceptions and the housing offer of the study area and therefore create business demand. For instance the development of North East Bexhill comprising of housing and employment development will simultaneously improve Rother’s family housing offer and provide additional employment opportunities helping to slow down the net in-migration of early retirees and attract young families.
Table 3.4 reflects existing, major sites – but other opportunities also exist further down the development ‘pipeline’. For example, the local authority representatives have noted that in Bexhill, the Beeching Road Industrial Estate is anticipated to lead to new opportunities close to Bexhill Town Centre. In Hastings and Rother, the proposed Ivy House Lane expansion would potentially add a further 11,500 sq m of industrial and office space.
Table 3.4: Key development sites (including tourism projects) in the study area Location Name Key details (size, type of development, timescales & status) Bexhill North East Bexhill • Major development linked to Bexhill Hastings Link Road (Enterprise Park) • Housing development - 1,300 dwellings • 50,000 m² of business floorspace (42 hectare site) • With support of Regional Growth Fund and Growing Places Funding the first development Bexhill Innovation Mall is now being built. • SEFUND site Hastings Priory Quarter • Long-term office and education scheme within the business district of Hastings town centre with substantial development already having taken place including the Creative Media Centre, University of Brighton Hastings Campus and Havelock Place. • Proposed future development on the site amounts to 21,700 m² of net development floorspace (B1, A1/A3, C1, D1, D2 and car parking). • Timescales - 2015/16- 2020/21. Hastings Development of Enviro21 Innovation parks in the Queensway Employment Corridor, comprising 15,300m² of business floorspace including:
North Queensway • Providing commercial space (B1 and B2) to local manufacturing companies wishing Innovation Park, to expand as well as companies outside the area. Hastings • Timescales - 2015/16- 2018/19. Queensway • New road proposed that will connect Queensway with Sedlescombe Road North (the Gateway/ The A21) in northern Hastings / St Leonards to provide access to employment
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Economic Case: High Speed Rail to Hastings and Bexhill
Location Name Key details (size, type of development, timescales & status) Queensway development sites. Employment • Corridor outlined as to be marketed to companies from around the UK and Europe - Corridor, Hastings growing the environmental technologies and services sector. Rye Rye Harbour (Rock • Mixed use employment-led site Channel) • Employment to centre on Rye Harbour industrial estate and consolidating the activities of the Port of Rye. • Total floorspace to be developed 10,000m². Battle Blackfriars • Housing site, planned urban extension of the town for at least 220 dwellings. Hastings West Marina • 3.11 ha site, 174 dwellings • West Marina redevelopment area, which is one of the few remaining significant re- development sites on the Hastings/St Leonards seafront. It presents an opportunity to create a high quality development to both regenerate the area and act as a tourist attraction in its own right. The site is considered to be suitable for leisure and recreational uses, particularly those associated with the water. The site could also accommodate small scale kiosk style retail uses normally found at the seaside, a cafeteria and a public house/restaurant. These would be best sited behind the promenade. If possible, new permanent beach huts should be provided to replace the existing ones at the western end of the site. Hastings White Rock area • Specific focus on the potential of the White Rock area itself, including the Pier, White Rock Baths, White Rock Hotel, and the theatre. At a wider scale, there are relationships between the seafront and the area bounded by Bohemia Road, Magdalen Road and White Rock Road; and the potential of White Rock Gardens and convent site bears exploration Hastings Cultural quarters • Support development around the following four cultural quarters within Hastings: – Old Town and The Stade – The Old Town has long been the focus for a wide range of cultural activity helped by its distinctive non-conformist image – ranging from Old Town Week, to crafts, to performance art. The introduction of the Jerwood Gallery and The Stade performance space linked to the strong heritage of the fishermen’s beach and museum is a new facet for the area. The St Mary in the Castle area is also included. – White Rock and the America Ground - The cluster of the theatre, the hotel, the pier and the opportunities of the White Rock Baths site and Bottle Alley defines the western end of this area which extends eastwards along the seafront to the America Ground area with the library, the Creative Media Centre and its collection of restaurants and cafés. – Academic – The core of this area is Sussex Coast College and the two University of Brighton’s Hastings campus buildings and the cultural activity generated within them. Complementary activities such as shops and cafés are beginning to establish around them and could be encouraged further. – Central St Leonards and Seafront - A range of cultural activities is spread throughout this centre, including art and craft shops, small galleries and community facilities including the Magnet Centre. St Leonards Gardens and Warrior Square are used for performance and cultural events, and there are small sites suitable for cultural projects. The area has been the subject of a regeneration programme over a number of years and it is becoming a favoured place for artists to locate to.
Source: Various including SeaChange Sussex, core spatial strategies, Hastings Development Management Plan, SE LEP SEP and consultations
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Economic Case: High Speed Rail to Hastings and Bexhill
3.5 Summary ° The economic growth of London and the South East continues to drive national economic growth and the Thames Gateway and the South East LEP area as a whole will be London’s premier expansion location, both for housing and sectors linked to London’s economy. The rail service proposed will directly link the study area to not only the capital but these key expansion areas as well. Population growth in the SE LEP area is partially predicated on net-in migration from the capital which will be an important component driving overall economic growth. Hastings and Bexhill have the potential, through better transport links to the capital, to benefit from these trends which will further contribute towards economic development policy efforts seeking to address current demographic patterns by attracting a high proportion of persons of working age to the area. ° Significant developments within the SE LEP area include the growth envisaged at garden city developments in Ebbsfleet and Ashford, which will both be connected directly and more quickly to the study area by the proposed rail service. ° Policy has long recognised that connectivity needs to improve across East Sussex and that connectivity along the coastal corridor and East to West is very poor. The proposed scheme has been identified as a key investment that could improve productivity and contribute towards long term economic growth through improving connectivity and thereby further lifting the image and perceptions of the area for business investment, commuters and tourists. ° There have been noticeable regeneration successes in the study area which has built a strong level of momentum behind current economic development policy to achieve the objectives of the Six Point Plan. This includes provision of commercial employment floorspace, revitalisation of town centres, enhancement of the tourism and cultural offer, business start-up support and improvement of the FE/HE provision. ° The overall growth planned for the area is 5,700 and 3,400 net additional dwellings and up to 100,000m² and 70,000m² of employment floorspace in Rother and Hastings respectively, over the planning period 2011-2028. These levels are considerably higher than historical rates and are based on the creation of 11,600 jobs within the study area over the planning period (4,250 jobs being associated with the B-use employment floorspace provision). There are a number of key developments planned within the study area to attract business investment and growth which demonstrate the strong local commitment and drive towards reversing the economic fortunes of the area and the need to foster a balanced demographic profile (especially in Rother). ° Given the growth agenda of the study area achievement of the core planning targets will rely on the continued success of regeneration policy and additional strategic transport investments such as this scheme that directly open the area to economic growth opportunities in London and the South East thereby providing additional stimulus to the local economy.
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Economic Case: High Speed Rail to Hastings and Bexhill
4 Consultation findings
4.1 Introduction
The study has included telephone consultation with a range of stakeholders regarding the potential economic benefits that high speed services to Hastings and Bexhill could bring. Stakeholders identified covered economic development, regeneration, education, businesses and the commercial property sector - a full list of consultees can be found in Appendix C.
During November and December 2014, 22 telephone interviews were completed and 6 email responses received. In addition 8 businesses provided responses via the Hastings Chamber of Commerce, which have also been incorporated into the summary. The findings are presented anonymously below under the broad topic headings that guided the consultations, with no comments attributed to specific individuals.
4.2 Background
4.2.1 Existing road and rail infrastructure
The majority of respondents felt that the strategic transport infrastructure (road and rail) serving the Hastings and Bexhill area is inadequate and isolates the study area’s economy from those of the South East and the UK and key markets such as London, Europe, Brighton and Gatwick. The core weaknesses are the comparatively long journey times and the unreliability of trips both by road and rail.
4.2.1.1 Rail services
The current rail services serving Hasting and Bexhill and surrounds were frequently referred to as slow and unreliable. The long journey times and relative expense of train tickets means that for most residents of the study area commuting into London or other areas in the South East is not a viable option and that currently the connection time to London is on the edge of what can be considered a sensible commute. This is in contrast to other areas such as Brighton, Ashford and Eastbourne where fast and regular rail services have encouraged commuting and closer economic links with the capital. The relatively long journey times to London have always been an issue and it is clear that other options for enhancement (such as on the Tonbridge line) are less viable given the level of investment that would be needed.
More specifically in relation to the service routes key comments included: ° The ‘Victorian’ nature of the single track along the Marshlink line. ° The difficulties in travelling from Bexhill to anywhere further north than South London as the current route serving Bexhill ends at London Victoria. ° The slowness of services on the Tonbridge Line due to the route it takes through hilly areas in Sussex and Kent and into the busy South London commuter belt and the unreliability particularly during winter (citing the three month closure at the beginning of 2014). ° Although it was acknowledged by some that the train services were good in terms of the number of destinations served this does mean that the speed of the services to London are compromised given the number of stops made along the way and indirect routes taken (e.g. the East Coastway services
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Economic Case: High Speed Rail to Hastings and Bexhill
and the stop and waiting at Eastbourne to turn the train around and at Haywoods Heath where some of the carriages detach).
4.2.1.2 Road
The road network of the study area both locally and in terms of accessing the regional and national network was referred to by a majority of respondents as ‘inadequate’. This hampers the business community given that they require fast and reliable access to their customers and suppliers across the rest of the region and country.
More specifically key issues highlighted included: ° The opening of the Bexhill Hastings Link Road is widely seen as a positive step to addressing capacity issues on the local road network but wider access to the M25/ South East economy is very poor. ° Congestion and ‘bottle necks’ along the A21 and A22, resulting in long journey times. ° The single carriageway of A259 which makes journey times longer.
4.2.1.3 Business community and tourism
The business community requires a fast and reliable transport network in order to access its customers and suppliers across the rest of the region and country. It was commented that manufacturing businesses (who located to Hastings in the 1960s) would not choose the area as a location today given the slow access to the wider network, particularly the Midlands. Similarly, the area as a tourist destination is relatively isolated compared to its competitors (such as Folkestone, Dover and Canterbury) and not close enough (in travel times) to other areas of the South East and the capital (unlike destinations such as Brighton and Eastbourne) to penetrate the weekend and short break market effectively. The profile of such a visitor is that they are ‘cash rich but time poor’ therefore a destination with a journey time exceeding 1hr30mins will change location preferences significantly.
4.2.1.4 Image
A repetitive theme from the consultations was that an improved and quicker transport network would significantly improve the overall image and perceptions of the area. Speed acts as a psychological barrier when businesses are looking to invest in an area whilst reliability is a huge issue. The image of the area is already vastly improving with fewer stories in the news about deprivation and positive reports on items such as new key developments and rising house prices.
4.2.2 Current barriers to economic growth
The poor transport infrastructure and resulting lack of connectivity to the rest of the South East and London is identified by the vast majority as a key barrier to economic growth in the local economy given the reasons highlighted above, however, connectivity needs to be addressed alongside other barriers particularly in relation to the existing business base, labour market & skills and the supply of commercial property and premises. The study area requires comprehensive economic regeneration and these barriers cannot be individually tackled one at a time. 41
Economic Case: High Speed Rail to Hastings and Bexhill
4.2.2.1 Low wage low skilled economy
Many consultees cited the lack of skilled workers in the study area as being a key barrier to business investment in higher value activities and as a result the local economy is characterised by low wages and low skills. This perpetuates a cycle of low value economic activity as the high growth sectors struggle to find the skills required and therefore do not locate to the area. In turn this attracts low income families and benefit migrants exacerbating this cycle and preventing economic growth (as demonstrated by Figure 2.10 in Section 2). To break such a cycle requires policy stimulus across economic development which has begun but still has a long way to go.
The labour market is also characterised by an ageing workforce given the high level of inward migration (partially a result of depressed economic conditions lowering property values in the area). There is a distinct lack of younger families (particularly in Rother) within the area with the disposable incomes to fuel economic growth in the local economy (the older generation tending to be capital rich but cash poor).
Some respondents thought that poor education provision in the area is responsible for students leaving school without the skills needed for the labour market. Other respondents thought that secondary and sixth form education in the area is good, but there is a high level of leakage given the lack of opportunities for school leavers who leave the area for university and find jobs elsewhere.
Given the low skills base of the area significant investments have been made in FE and HE provision, such as the new University campus to address these barriers.
4.2.2.2 Sites and premises
Sites and locations in the study area are being brought forward by public sector investment between the local authorities of Rother and Hastings. Good quality business space has been a significant constraint on indigenous business growth and inward investment. This shortage is demonstrated by low vacancy rates in the study area and the quick occupancy of new managed workspace led by the Council. There is latent and pent-up demand for modern accommodation.
4.2.2.3 Broadband connectivity
The poor connectivity due to inadequate transport links is also accompanied by poor Broadband connectivity which also works to dissuade business investment in the area.
4.2.2.4 Image and perceptions
The image and perception of the area (linked to the connectivity issues) was also highlighted as a key barrier to economic growth with negative perceptions of the area as a ‘backwater’ with a legacy of deprivation which discourages investment and tourism.
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Economic Case: High Speed Rail to Hastings and Bexhill
4.3 Scheme and potential impact
There was a general consensus from respondents that this scheme will provide an economic stimulus to the study area through improving business investment and growth, enhancing the skills of the labour market, strengthening the tourist offer and assisting in the development of a functional commercial property market. However, despite the high levels of optimism, consultees were keen to highlight that the investment itself although a positive step in the right direction will not solve all of the complex economic development issues holding back the study area and that the other key policy interventions are crucial, particularly those addressing labour market issues, to provide the regeneration and economic stimulus needed in the area.
Significant growth aspirations are already in place for the study area with the development planned at North East Bexhill following completion of the link road and development in and around Hastings town centre. This commercial and housing activity will fuel demand for faster links to London (for people both living and working in these areas).
The following provides a description of the potential impacts identified under each area although many of these overlap and reinforce each other, particularly the labour market and business investment. For instance the attraction of higher skilled individuals (and their families) to live in the study area will lead to immediate demand for local services but also over the longer term will act as a stimulus for business investment as the skills profile of the area changes.
4.3.1 Business investment and growth
Respondents were very positive that the scheme would enhance the prospects for business investment and growth in the economy. The following mechanisms were noted: ° Positive impact on the perceptions of the area as a business investment. The service will improve not only the links to London but the wider national network in general – which changes the overall connectivity of the entire area and its proposition as a location for investment. Transport links are regularly cited as one, if not the key, barriers to investment in the study area. – The relative attractiveness of the area vis-a-vis other towns such as Brighton, Folkestone, Dover and Ramsgate which already enjoy much faster journey times to and from London would improve and enable the study area to compete more effectively for business investment. – The study area will be better positioned to attract investment into activities such as financial services, call centres, educational facilities (such as training colleges), conference facilities, budget hotel chains and entertainment package centres. – Many believe that the improved link will improve the study area’s attractiveness to London-based businesses providing a range of professional services with the potential to relocate all or some services. This has happened in Brighton where professional practices such as architects have relocated as they still have adequate links to customers but do not need to be based in London. ° Impact of strengthening links between Hastings and Bexhill to other designated growth areas and opportunities over the next three decades, particularly the opportunities around St Pancras, Ashford, Ebbsfleet, the rest of the Thames Gateway and East London. Other key growth opportunities
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Economic Case: High Speed Rail to Hastings and Bexhill
include the expansion of Lydd Airport which will improve connectivity of the area to, potentially, Lille, Paris and Brussels and the closure of one of the reactors of Dungeness power station (Kent) which could be a site for nuclear waste and generate employment on a scale that influences labour and housing markets. The new service will open up the study area to a huge amount of development and economic growth surrounding the route which local businesses could serve and investment could flow from. ° Supporting indigenous business growth and specific growth sectors. The new service would support indigenous business investment by primarily providing a wider skills base to draw upon. There are many technology businesses and clusters in the area that could benefit from high speed services helping improve the recruitment and retention of staff. The new service could also increase self- employment and small business activity across a range of sectors. – For example the vacuum technology cluster would benefit from its companies being closer to key markets, investors and a wider labour market pool. – Other existing sectors identified by respondents as being likely to invest further in the study area as a result of the services include manufacturing and financial services, with the growth plans of key firms being significantly bolstered by the planned investment if it can improve accessibility to labour markets and the influx of a higher skills base. – There are strong opportunities for the tourism, creative and cultural industry to develop in Bexhill and Hastings given existing local attractions such as The De La Warr Pavilion and Jerwood Gallery coupled with a direct link to London which could help unlock the significant potential that exists via enabling a critical mass of activity / demand for the offer (also discussed under tourism section below). Brighton is the exemplar of a changed seaside town which is partially due to good connectivity but also the cultural economy has played a key role. – There is also potential for developing a media cluster given the specialisms at the University Centre and now closer proximity to London where this industry is heavily concentrated. – The improved links to London will also improve the appeal of the area as a location to those individuals or small businesses who may be working from home or running small rural businesses where they need to travel to London to see clients in the week but don’t need to do this on a day to day business (or at peak times). ° Impact on demand of attracting high value commuters. The improvement in the service was seen by many as potentially leading to an influx of younger and skilled commuters to Hastings and Bexhill from London and other areas in the South East which would increase demand for goods and services in the economy and benefit existing local businesses. In turn the improvement in the skills base over time could encourage inward investment for financial services, advanced manufacturing and tourism employment boosting the remaining internal labour market.
4.3.2 Labour market
The general consensus is that the new services are likely to increase the range of opportunities available to working age people already living in Hastings and Bexhill and make the area more attractive for relocation of higher skilled individuals (and their families) to relocate fuelling demand within the local economy and housing market.
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Economic Case: High Speed Rail to Hastings and Bexhill
More specifically the following points were raised: ° Potential inward migration of high value commuters. If London and its surrounds becomes commutable from the study area then Hastings and Bexhill become more desirable places to live which in time leads to lower out migration, better retention of disposable income and an increased leisure/cultural provision to meet demand. This potential impact is predicated on views that the study area has a lot to offer in terms of being an attractive area to live by the sea with a growing leisure, education and cultural offer. Such an offer alongside a rail journey time of just over an hour to the capital would be extremely attractive to younger families being forced out of London and surrounding larger towns by excessive house prices and overheads. This may be in terms of full time commuters or those needing to commute to the capital on a part time basis. – Parts of Hastings, such as St. Leonards, could provide a very good housing market offer given the stock of large Victorian houses, which mirror many streets in London, for potential commuters. This housing offer would be ideal at least for those working part time in London. – In Hastings, this could potentially have a significant long term effect by attracting younger families (of part time commuters in particular) to the study area (particularly Bexhill and Hastings) and help to address the massive imbalances in the housing market that currently exist (high levels of multiple occupation) and address the cycle of worklessness and deprivation through providing local demand for services. – The study area has the key attributes to attract high value workers but they need to feel connected to the rest of the country and be able to access friends and relatives very quickly. ° The scale and type of commuting opportunity. It was not widely perceived that the towns would become dormitory commuting towns into London and its surrounds (although this was raised by some) but rather that some net commuting towards the capital would be encouraged and that it was the offer to the part time commuter that could really stimulate economic activity. It was also commented that the benefits are not likely to be for existing commuters who already make the commute to London especially since many of these choose to commute along the Tonbridge line to arrive at Charing Cross (often the correct side of London for many commuters) and that the benefits relate to making the area attractive to a different sub set of part time commuters. ° Retention of skilled workers more likely. The improved rail links should also help the study area to prevent the out migration of higher skilled workers and young people who have tended to move out of the area for work. Some respondents raised the issue that this could mean losing local talent from the local economy to London once commuting becomes a possibility but most thought that the benefits of additional people spending in the local economy would override any dis-benefits. ° Growth opportunities along the route that local labour could serve. The growth opportunities surrounding areas along the rail route that are now opened up to the study area are enormous. The opportunities around the Thames Gateway (Ebbsfleet), Ashford, Stratford and St Pancras could now be directly served by labour from the high speed services direct from Hastings and Bexhill. ° Some reservations - there were some concerns that local communities in the study area may be left behind by the changes the improved service could bring especially if house prices go up as people move into the area and they are priced out the market. There is a need to ensure that education investment fits alongside the transport improvements and that local people’s skills and attainment also improves. There is a very delicate balance between the area needing investment and a more diverse population but also ensuring that local people can compete in terms of market prices and educational
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Economic Case: High Speed Rail to Hastings and Bexhill
attainment of people who move into the area. There were also some reservations about the ability of the area to attract young families given the need for the education offer to be improved.
4.3.3 Visitor economy
There was general consensus from those involved in the tourism industry that the high speed rail services will have a positive impact on the visitor economy. Key mechanisms cited centred on the following: ° Enhancing the current visitor profile and opening up the area to new markets. Although the area already has a good tourism offer it has been limited by the visitor profile which is dominated by visitors from surrounding South East counties due to the difficulty tourists faced in reaching the area. The new services would help to encourage more visitors from areas currently discouraged by the long journey time. The reduction in journey time is likely to: – Attract more visitors for London. Tourists from London are very time sensitive in their travel horizons and a small time saving likely to have a disproportionate impact. A high number of tourists make the relatively quick journey from London to Brighton and it is envisaged that a competitive time to the study area could potentially draw on some of this movement. – Open up new tourism markets from further north. The creation of a service to St Pancras and the north of London and beyond will provide easier onward access to the rest of the country, unlike the current services to Victoria which only provide easy access to the south of London. Traditionally the London market for the study area comes from the south east quadrant of the city, roughly an area bounded by the Thames and the Brighton main line/A23. The new direct service would provide the potential to attract residents from the north east quadrant of the capital too and the east end (the latter particularly helped by the fantastic transport interchange opportunities provided by Stratford/Stratford International). As well as capturing the London market better, this would also help capture the north of London market, with a simple change at Kings Cross/St Pancras. Other key markets include those along the HS1 network such as South London / Surrey / Kent and Europe (Netherlands, Belgium, Northern France and Germany) with the service enhancing the potential of short breaks from these locations that would increase tourism value and spend per trip. – Potential for developing new tourism offer. The improved links to other key growth areas outside of London such as Ebbsfleet and Ashford provide the potential to develop a tourism and leisure offer in conjunction with other attractions being developed particularly the theme park at Swanscombe Penisula. A visitor could stay in a seaside town with quick and reliable access to such key attractions. – Developing a solid marketing offer. Maximising the potential of the opportunity to attract visitors from London and inbound visitors will rely on careful marketing of the tourism offer and its key assets. Transport links alone will not encourage more visits without a solid product offer. ° Enhancing the image and perceptions of the tourism offer. The entire tourism image of the area would be further enhanced by the association with the high speed services network, raising the study area’s profile nationally and increasing the number of tourists as a result. ° Significant benefits for Rye – were cited given the improved links with West Sussex and its current popularity. It was commented that Rye is already benefitting from increased inbound tourism as a result of a 75 minute journey time connecting at Ashford. This journey time would be reduced still further
46
Economic Case: High Speed Rail to Hastings and Bexhill
bringing still greater benefits and shows that Hastings and Bexhill could also become more attractive to the inbound tourist. ° Potential constraints. Limited bed space in Hastings was raised as a potential limiting factor to the increased numbers of weekend visitors but respondents thought that as more day trippers visited using the fast rail link, demand would be created for more overnight and weekend spaces and businesses would expand to meet this demand. Indeed, there has been a general upsurge in interest already from hotel groups looking at potentially investing in the study area on the back of potential high speed rail services.
4.3.4 Commercial property market and housing
In general respondents were very positive that both the housing and commercial property market would benefit as a result of the scheme given a clear barrier to development, poor connectivity, would be at least partially removed. This alongside the road improvements planned would help to place Hastings and Bexhill on the map for a range of enquiries including from the local market (indigenous expansion or relocation), the regional market (given the area could compete more effectively with locations such as Brighton, Crawley and Sevenoaks) and the national market (the area is cost effective enough to compete with the regional centres).
More specifically the following points were highlighted: ° Progress to date. Substantial regeneration and pump priming has already occurred in the market, particularly efforts to create a functional town centre office market in Hastings (via the Priory Quarter) and the North East Bexhill development, which has a high pipeline of development planned. This has been part of a wholesale regeneration programme which has looked to address the skills issues through the University Centre and Sixth Form College. This has been successful with large scale lettings such as Saga demonstrating that the area does have a competitive offer by providing the Grade A office space in demand. The current poor connectivity undoubtedly impacts on this offer and currently places the study area out of the running for many footloose enquires. ° Saturation of the London market and back office functions. The London property market has become so expensive that many companies simply can no longer afford to keep back office functions in central London and simple economics is now forcing them to look further afield. This has already occurred in many of the peripheral areas of the London but these markets are also becoming saturated given the level of growth. ° Stimulating demand for commercial property and development sites. The study area’s commercial property market is viewed as being very weak or virtually non-existent given the remoteness of the area and high speed services could help establish a market. It was remarked by those working within the commercial property market within the wider South East area that: – Firstly, most companies will not consider office schemes in Hastings or Bexhill because the area is simply too remote from London, to access key markets and suppliers and key transport connections (particularly Heathrow and Gatwick). This has been a very common response from clients. Therefore the significant journey time saving would now put Hastings and Bexhill into consideration alongside other locations.
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Economic Case: High Speed Rail to Hastings and Bexhill
– Secondly, the study area has the schemes and development sites to satisfy demand from the capital and its surrounds for professional services space that can relocate or become second sites for London businesses. It was highlighted that many other competing locations such as Brighton, Thames Estuary and the Medway towns lack sites that are ready to build with existing planning permissions and services in place. Brighton for instance has no large scale employment space left and there are very limited choices for large scale enquiries. Hastings and Bexhill through active regeneration have took the steps to build the space and wait for demand, which puts them in a key advantage position for attracting demand if the remoteness issue can be addressed. For example, the strategic investment in the rail service could convince potential investors that North East Bexhill is a viable but much cheaper location than the Thames Valley or London, but still able to have good links to clients and suppliers. Rye Harbour, a key brownfield site, could also become significantly more attractive with such an announcement. – A key example given of this dynamic was the investment by Saga into the priority quarter which needed a large space and also had exhausted the labour skills base of its other location near Romney Marsh. – Finally, it was also remarked that announcing the decision to invest in the rail scheme would by itself lead to more enquiries and stimulate demand. In fact this has begun already with both commercial agents and the public sector economic development bodies reporting an increase in active enquiries from developers. ° Skills as a factor in company location decisions. Undoubtedly skills are an important element of a company’s location choice but interestingly most commercial agents commented that this is often an issue in many labour markets in the wider South East and that the advantage of the study area is that wages are low and therefore companies are more willing to invest in training. ° Stimulate housing demand. The housing market within Hastings (more so than Bexhill) is depressed due to low income and associated buying power, improving journey times will help to encourage more competitive businesses to locate in the area – more skilled people would move to the area and it could help to rejuvenate the housing market. There is enough housing land supply but the problem currently is lack of demand. The influx of demand that could be opened up from part time commuting and from business investment would provide the stimulus to developers to increase housing market supply and address the imbalances in the housing market, especially the high level of RSL / multiple occupation dwellings. Importantly, the study area has the housing allocations that could support business investment unleashed by the rail scheme. There is also a wide variety of housing on offer especially in Hastings, St. Leonards and the surrounding countryside from low budget accommodation to Victorian houses to country cottages. ° Importance of investing in other key transport schemes. The Bexhill-Hastings Link Road and A21 improvements were all noted as important upgrades that would complement the proposed scheme and removing the barrier associated with remoteness.
4.3.5 Other benefits and comments
Other specific points that were raised included: ° Potential benefits to education provision. This could be via the rail service creating a wider pool of recruitment for teachers and higher standards from parents (new to the area) could drive up local
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Economic Case: High Speed Rail to Hastings and Bexhill
standards. The service could also improve transport links for students looking to study in Hastings at the University Centre from Kent. ° Fare prices. There were concerns that the high speed services would be too expensive for many of the local residents and students and make the service accessible only to those wealthy individuals commuting into London.
4.4 Summary • The existing rail and road infrastructure of the study area is viewed as inadequate for a modern functioning economy and effectively cuts the area off from the wider economies of the South East and London. This is both in terms of the poor speed and reliability of transport services. This negatively impacts on the study’s area’s business investment proposition given the relatively poor access to key customers and suppliers and as a tourism destination given the area’s relative isolation to its competitors and inability to penetrate the weekend and short break market of the South East/London. • There is an established low wage low skilled economy with deep rooted structural problems that needs to be addressed by comprehensive economic regeneration policies – addressing poor connectivity alone will not be enough. This includes across skills, innovation and business support, image and perceptions, transport and an inadequate supply of modern business premises. • There was a high optimism from respondents that the scheme will provide economic stimulus through: – Potentially super charging the entire business investment proposition of the area, given the regeneration undertaken to date in providing a commercial property offer, through enhanced connectivity to the regional and national transport networks. The improved links to designated growth areas could lead to local businesses serving their demand for products and services and over time an outflow of investment. The indigenous business base of the study area would also be enhanced from accessing a wider pool of labour and skills which can increase recruitment and retention whilst there is scope for supporting small business start-ups and self-employment predicated on part time commuting to the capital. An increase in commuters choosing to live in the area will also boost indigenous demand for local services and over time can change the skills base of the area encouraging investment and growth in higher value added activities. Key sector opportunities include building on the strengths of the creative & cultural industry, high value technology clusters and developing more professional & financial services. – Positively impacting on the labour market of the study area through the potential inward migration of high value commuters and their families (at least on a part-time commuting basis) attracted by the strengths of the area as a place to live. Over time this will help address long term labour market issues by creating more indigenous demand (that can be served by low skilled labour) and diversifying the housing market. The service will also help improve the retention of skills, from those relocating and through slowing down the outward migration of talent. – Improving the tourist offer of the study area by opening up new markets, in terms of penetrating the short break and weekend market of London, other parts of the South East and further afield (northern Europe). Also potential to deliver specific tourist offer aligned to designated growth areas. – Helping to develop a commercial property market by enhancing the attractiveness and viability of existing development sites, through allowing Hastings-Bexhill to be considered by firms relocating out of London or looking for expansion space. In North East Bexhill the new service would clearly complement and enhance the regeneration efforts that have gone into unlocking the development land alongside the link road. The housing market will also see higher levels of demand from those attracted to live in the area now that at least part-time commuting to London becomes an option.
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Economic Case: High Speed Rail to Hastings and Bexhill
5 Economic and regeneration benefits assessment
5.1 Introduction and approach
This section examines the potential scale of economic and regeneration benefits that can be directly attributed to the scheme based on the evidence gathered regarding the growth aspirations and regeneration plans of the study area and the wider growth context at a national, regional and local level. Delivery of high speed rail services to Hastings and Bexhill is a strategic infrastructure investment which will dramatically improve connectivity with London, the South East and the rest of the country. As improving connectivity is a key economic development policy focus for the study area an investment of this type has the potential to complement and further those achievements being made in other areas – such as building a strong and competitive commercial market, improving housing choice and transforming existing images and perceptions. The difficulty is in assessing the level of growth that can be directly attributed to the service given those other policy interventions that will also impact on economic growth.
This assessment provides indicative assessment of the likely scale of economic growth that could be attributed to the scheme given the evidence gathered around: ° Growth opportunities at the national and regional level which can now be accessed more quickly due to the proposed scheme. ° The scale of economic growth envisaged at the local planning level which is predicated on active economic development policy and the existing momentum behind regeneration efforts. ° The evidence gathered through the consultation process from various stakeholders across regeneration and economic development, commercial property development, tourism & culture, transport and the education sector. This includes anecdotal evidence which supports the scale of growth envisaged locally and interest around the scheme. ° The evidence gathered on the impact of HS1 in other parts of the UK and internationally (using the findings in Appendix B High Speed Rail literature review).
The approach to assessing the economic benefits here is as follows: ° Overview of how the scheme will address improving connectivity of the study area (a key pillar of the Hastings and Bexhill Task Force Six point Plan) and summary of the key mechanisms by which the scheme will impact on economic performance. ° Assessment of the likely jobs growth that can be directly attributed to the scheme in the study area, based on the boost it will provide to economic performance. This is a land utilisation approach which considers the benefits associated with supporting B-use commercial development as identified in the planning strategies and along the growth corridor. ° Analysis of the potential visitor impacts of the proposed service. The service is likely to impact on the visitor economy of the study area given the evidence gathered therefore a growth scenario is modelled to understand the potential scale of benefits that could accrue from increased visitors and spend. ° Focused discussion with local authority planning, regeneration and economic development officers in February 2015 to consider and explore the various links between high speed rail and growth in the area over time.
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Economic Case: High Speed Rail to Hastings and Bexhill
5.2 Existing and future rail infrastructure
The implementation of high speed services to Hastings and Bexhill will provide a step change in accessibility via reducing journey times considerably to London and its surrounds and the connections to the national network in general. Figure 5.1 below displays the HS1 network that the Marshlink line will now directly connect into (with no stopping) and those key locations en-route that will become more accessible to the study area. This will provide a significant journey time saving to London compared to the Tonbridge and East Coastway services. The services at St Pancras will provide direct onward links to Midland Main Line services and East Coast main line services at Kings Cross. It has been well recognised that the polarisation between the more deprived areas of East Sussex such as Hastings and the rest of the country is largely due to poor levels of connectivity. The direct service would significantly address this constraint on the study area and complement those other key policy areas within the Six Point Plan.
Figure 5.1: Strategic transport network with the high speed rail services
Source: Mott MacDonald
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Economic Case: High Speed Rail to Hastings and Bexhill
5.2.1 How the scheme will impact on economic performance
The evidence gathered through the economic context, literature review and consultation indicates that the service is likely to impact on the economic performance through three key routes. In each case improvements in service would be expected to lead to improved perceptions of Hastings and Bexhill as locations for business, residence and as a place to visit. Across each of these, the present image of Hastings and Bexhill as having poor connectivity will be challenged. In its place a refreshed view of Hastings and Bexhill as a dynamic, changing area will percolate to investors, would-be residents and potential visitors: ° Business investment and growth: The service will impact on the investment proposition of the area and promote indigenous business growth through the improved connectivity to key markets in the South East, London and even nationally which will reduce business costs (supply side effects). There is a strong body of research that supports the consultation findings that poor connectivity in the study area is a major barrier to business investment. For instance market research with businesses and potential investors in Hastings identified that transport links are a ‘deeply entrenched and major barrier’ to choosing Hastings as a town to expand or relocate to18. This is likely to alter the spatial pattern of regional economic activity with the study area now able to compete more effectively for investment in a range of sectors. This includes building on the strengths of existing clusters such as advanced manufacturing and associated technical services, the creative and cultural sector and professional services that could be outsourced from London and its surrounds. Given the significant regeneration efforts to date the commercial property supply within the study area has now been modernised and is ready to absorb additional demand that could be created from the scheme improving connectivity. Business productivity will also be enhanced through allowing more economic activity to concentrate, at high density, in a particular place and by allowing increased specialisation to occur (which the WITA analysis examines in the following chapter). ° Provision of new commuting opportunities: The service will now provide a viable commuting opportunity between the study area and London and its surrounds. The journey time savings places Hastings and Bexhill at the brink of what is considered a sensible commute (68 mins. to Hastings and 78 mins. to Bexhill) and opens up an entirely new proposition to those high income earners working in London and its surrounds who may choose to reside in the area given the relatively low property prices and quality of life benefits. The inward migration of such groups will in turn raise average incomes in the study area. At the very least the service is likely to at least substantially increase part time commuting of higher income earners. The attraction of working age commuters will provide benefits in terms of stimulating demand for local services, housing in the area and changing the dynamics of the labour market over the longer term. ° Visitor economy and growth: The service also presents the opportunity to enhance and build on the strengths of the existing visitor economy via promoting links to new markets within London itself but also further afield given the significantly improved onward connections to the north east of London, to the rest of the country and those key European markets along the HS1 network. These opportunities are further detailed in Section 5.3.3. Overall the study area, given its existing tourism strengths, is likely to become a significantly more attractive destination for weekend and short breaks.
18 Establishing the Image of Hastings, Hastings Borough Council, CW Research, March 2010 52
Economic Case: High Speed Rail to Hastings and Bexhill
5.3 Overarching growth plans
Overall up to 9,100 houses and up to 170,000m² of employment space development is planned across the study area up to 2028 (Table 5.1) based on the core strategies for Rother and Hastings.
Table 5.1: Total housing and employment growth planned in study area, 2008-2028 Housing Employment (B-use employment space) Rother – total At least 5,700 dwellings 93,000 – 103,000m² (2,500 jobs) Hastings – total At least 3,400 net additional dwellings Up to 70,000 m² (1,750 jobs) Study area – total At least 9,100 net additional dwellings Up to 170,000 m² (4,250 jobs)
Source: Rother Core Strategy, Shaping Hastings, Mott MacDonald
5.3.1 Employment land development
5.3.1.1 Total jobs growth
The level of floorspace development is predicated on an increase of around 11,600 jobs across Rother and Hastings over 2008-2028. The 11,600 jobs growth figure originates from a policy based labour supply approach that assumes the workforce expands over the period, rather than declining if projected forward on past demographic trends. Importantly, the jobs growth figure factors in significant growth above the trend level due to: ° a significant increase in economic activity almost to the same level as the South East (85% compared to 72.4% and 74.9% in Rother and Hastings respectively19); ° a reduction in unemployment to a point of having full employment (defined as 3% unemployment); and, ° a substantial increase in the proportion of people working locally (i.e. a reduction in net out-commuting for work).
Clearly, the assumptions behind the targets already factor in a fairly high level of objective-led target setting given they anticipate significant demographic change within the study area. For context the latest forecast from the East of England forecasting model, which is essentially an historical trend based forecast, is for total employment in the study area to increase by approximately 0.7% per annum over 2008-202820 resulting in jobs growth of 9,300 jobs compared to the 11,600 jobs under the labour supply approach of the core spatial strategy.
Therefore the higher level of growth envisaged within the study area, above a trend based scenario, will take time to achieve but the consultation undertaken with the commercial property sector and local economic development bodies has emphasised that high speed rail is a scheme that can provide a boost
19 See Hastings and Rother Employment Strategy and Land Review Update, August 2011, p.22. The current economic activity rates are those referenced in Figure 2.2 in Section 2. 20 Using the latest forecasts from the East of England Forecasting Model, developed by Oxford Economics, and accessible here: http://www.cambridgeshireinsight.org.uk/EEFM 53
Economic Case: High Speed Rail to Hastings and Bexhill
and ensure employment gains are made earlier than anticipated and increase the likelihood that the planning targets will be fully achieved.
Furthermore, as the scheme is not considered in the core growth strategy targets any catalytic effects it has on jobs growth (via employment site take up and by attracting a higher proportion of working age persons) is likely to trigger a review of the core strategies and employment targets within them according to discussions with local planning officers in February 2015.
5.3.1.2 B-use employment growth
The sectors identified as fuelling overall jobs growth within the employment strategy and land review (2008) were identified as financial & business services, other services, the public sector, distribution, hotels & restaurants and some manufacturing growth21. Clearly not all of these jobs will be B-use employment and in order to provide an indicative B-use jobs growth figure a broad employment land density of 40m² per worker is assumed, based on that used within the core spatial strategy evidence base22, resulting in a B- use jobs growth figure of 4,250.
Figure 5.2 below compares this jobs growth and the historical performance of B-use employment. For simplicity, the historical figures are based on assuming 30% of total employment in the study area is B-use (using BRES employee data and self-employment data from the Annual Population Survey to estimate total employment levels). Although the projection is optimistic it appears a reasonable ‘policy on’ scenario in comparison to other aspirational targets within other spatial strategies with annual average B-use employment growth of approximately 0.9% over 2008-28.
21 Hastings and Rother Employment Strategy and Land Review, May 2008, p.46. This appears to be the approach taken in the Rother Core strategy which states that business land release, of some 100,000sq.m across the district, will support of the order of 2,500 jobs (p.28). 22 This is based on the assumption used in the Employment Strategy and Land Review for the area, for translating jobs growth to net floorspace requirements. 54
Economic Case: High Speed Rail to Hastings and Bexhill
Figure 5.2: B-use employment 2000-2028
27,000
25,000
23,000 Jobs growth of 4,250 jobs 21,000
B-use employment 19,000 Total B-use employment 17,000 B-use employment projection
15,000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
Source: BRES, Annual Population Survey (APS). Total employment estimated by adding total employees from BRES with self- employment figures from APS. B-use employment assumed to be 30% of the total.
Following consultation with specialists from the local authorities it is clear that even though the jobs growth behind the planning targets is aspirational and higher than a trend based forecast there is significant ambition to exceed them given the momentum behind regeneration policy that is prioritising the development of a family housing market and the pipeline of modern and high quality sites and premises. More specifically it is worth highlighting from the consultation that: ° There has been an influx of active enquiries to economic development bodies and commercial agents recently from developers which are at least partly due to the potential for high speed rail and the faster journey times to London that it could deliver. This includes interest in the commercial property being developed but also vacant town centre sites and potential hotel investments. ° Over recent years the study area has continued to attract significant business interest via its inward investment and economic development bodies. For instance this includes: – The attraction of businesses such as Saga and Torr Scientific Limited (TSL) to invest in the study area and the successful ongoing growth of existing businesses such as Plastipack and Source BMX. – The full occupancy of the re-development of the derelict Sidley railway goods yard in Bexhill within two years of opening for start-up businesses.
Indeed, as stated above given the momentum behind regeneration efforts and the potential for the scheme to act as a catalyst to jobs growth the core spatial strategy targets are likely to be reviewed around the same time the rail scheme becomes operational to ensure they are up to date.
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Economic Case: High Speed Rail to Hastings and Bexhill
5.3.1.3 Employment attribution to the scheme
The evidence gathered supports the view that the rail scheme could clearly assist with these efforts by providing a boost to the overall investment proposition of the area and providing further demand for local services by attracting younger families to locate in the area. The study area is fairly unique in the region in that it has an existing development pipeline of large premises and sites that have been developed or are ready to develop in terms of extant planning permissions and associated infrastructure works. This portfolio becomes a much stronger proposition to potential businesses once connectivity to the capital is improved and will assist in achieving the growth targets highlighted above.
Attributing the scale of growth planned up to 2028 that the rail scheme could directly support is difficult given the exact relationship between the rail infrastructure improvements and employment cannot be accurately predicted. However, there are a number of key sources of evidence that have informed the assessment here of the level of growth attributable to the rail scheme. This includes: ° Economic context. There is a well-developed and planned approach to economic regeneration in the study area and momentum behind past efforts, which a strategic infrastructure scheme such as this supports. Furthermore, the service will connect the study area to key growth opportunities in and around London. The investment by itself will not achieve the employment targets but as part of the wider regeneration package it will help to further stimulate economic performance via business investment and increased commuting. ° Qualitative findings. The consultation supports the view that the scheme will stimulate the commercial property market and make the entire area more attractive for business investment and commuting. Many believe that given the success of regeneration efforts to date that the rail service could almost ‘supercharge’ the local economy by building on the key foundations that have been put in place – such as the investment in the commercial property market and provision of family housing – to accommodate increased demand. The commercial property sector was fairly unanimous through our consultations that it is likely development would be brought forward and stimulated on key sites such as North East Bexhill in Rother, the Priory Quarter and Queensway Employment Corridor in Hastings with the announcement of high speed rail services. ° Literature review findings. The literature review although generally inconclusive about exact impacts revealed that other studies have found the development impacts of HS1 elsewhere to lead to approximately 5% additional growth to that planned (these being studies analysing the impact at a UK level). The review did highlight that settlements which benefit are those that have supporting policy interventions in place and are oriented towards growth. Hastings and Bexhill’s regeneration trajectory of the last two decades or so ensures that the foundation has been made through labour market, land market, business support, property moarket, infrastructure development and marketing initiatives to create the correct blend of intervention and change which will allow high speed rail to stimulate further change and act as a greater catalyst for growth in future. ° Review of core spatial strategy targets. As identified above the core spatial strategy targets do relate to a ‘policy on’ scenario with total jobs growth higher than a trend based forecast but there is evidence to suggest that they are achievable and could even be revised upwards in future. They were also developed during weaker economic circumstances and do not take account of large infrastructure investments such as the high speed rail scheme.
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Economic Case: High Speed Rail to Hastings and Bexhill
Given the evidence gathered, the following table provides an indication of the jobs and GVA benefits per annum if 2%, 5% or 10% of the total B-use jobs growth was assumed attributable to the scheme.
The level of growth under the 10% scenario is perhaps optimistic and higher than the level of growth that has been attributable to rail services elsewhere but appears a reasonable estimate given the evidence gathered in relation to: ° existing momentum behind regeneration successes and ongoing policy to date – which is clearly working to help transform the offer of the study area to businesses, residents and visitors; and, ° that the scheme will clearly improve economic performance via the three key routes highlighted in 5.2.1.
The scheme, if implemented from 2019, would occur at a time when many existing policy interventions, especially those from the Six Point Plan, are taking hold and providing the foundations for economic growth. The rail service would lead to additional demand which the study area could absorb given the public sector investment in other key policy areas including investment in those pillars relating to: image & perceptions, enterprise growth, skills and upgrading the commercial premises & housing choice offer.
Therefore taking the 10% growth attribution level the overall scale of impact of the rail scheme is 425 jobs attributable to the high speed rail scheme and £19.9m of annual GVA benefits. Although the scheme is unlikely to be completed until 2019 the evidence gathered has demonstrated that if there was a firm commitment to the scheme commercial property and development would pick up even before the upgrade has been completed.
Table 5.2: Growth attribution scenarios, benefits per annum Growth attributable - 2% Growth attributable - 5% Growth attributable - 10% Employment floorspace target 170,000 m² 170,000 m² 170,000 m² Gross jobs supported 4,250 4,250 4,250 Gross GVA, £m £198.8 £198.8 £198.8 Growth attributable to the rail 85 213 425 scheme – number of jobs Growth attribution to the rail £4.0 £9.9 £19.9 scheme – GVA, £m pa
Source: Mott MacDonald, Gross GVA based on assuming average GVA per employee of £46,800 based on the East Sussex 2013 total using ONS workplace GVA data coupled with BRES employee data.
Given the encouraging conditions for growth set out above, it is reasonable to expect the high speed rail services supporting 10% of the stated employment growth targets. If the benefits under the 10% attributable scenario were assumed to build up fully over 5 years of completion of the scheme in 2019 the net present value of the benefits, over a 30 year period, would be £269.3m23. This is a high level of
23 A 30 year time horizon has been used with an average duration of GVA benefits of 13 years. Although commercial buildings may last longer than 30 years the new businesses locating within them (on the back of the rail scheme) are likely to move on sooner than this and therefore this time horizon is a reasonable assumption. The average persistence of GVA benefits in general is perceived as 10-15 years (for references refer to Impact of RDA Spending, Department for Business Enterprise & Regulatory Reform, March 2009). An average discount rate of 3.5% has been used in line with HM Treasury guidelines. 57
Economic Case: High Speed Rail to Hastings and Bexhill
economic benefit for the employment land benefits alone given the scheme is expected to cost in the range of £150m.
5.3.2 Housing development
The evidence gathered has also supported the view that housing demand and therefore housing development in the study area would be stimulated from increased commuting on the back of the rail scheme. Using the same framework as above the analysis below provides an indication of the likely level of construction jobs associated with housing development if 2%, 5% or 10% was assumed attributable to the rail scheme. The impact of housing development would be more than just these construction jobs as highlighted in the context review and qualitative research since it could also provide a stimulus for addressing long term issues and imbalances with the housing stock, especially within Hastings, given the large proportion of houses in multiple occupation. Housing market development in the area could also support the overheated South East property market by increasing both overall supply and supply of affordable homes. Given the evidence outlined above it has been assumed that 10% of the housing development can be attributed to the scheme which would result in an average of 667 extra construction workers during the construction period (approximately equivalent to 67 temporary construction jobs where a job lasts for ten years).
Table 5.3: Housing development and benefit linked to rail scheme. 2% 5% 10% Housing target 9100 9100 9100 Housing attributable 182 455 910 Average construction cost (£100,000 per dwelling), £m £18.2 £45.5 £91.0 Person years of employment (using Job: Capex (1:£136,300)) 133 334 667 Full time equivalent (FTEs) jobs (person years / 10) 13 33 67
Source: Mott MacDonald. Job: capex ratio for construction based on the South East average using Annual Business Survey data and average construction wages from Annual Survey of Hours & Earnings (ASHE), 2012.
5.3.2.1 House prices
Clearly, given the channels via which the rail scheme will impact on economic performance it is also likely to increase property values within the study area. Many factors influence the prices of specific houses but it is clear that locations with quicker and more frequent connections to central London are regarded as more valuable and sought after, as shown in the analysis by Greengauge 21 below (Figures 5.3 and 5.4).
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Economic Case: High Speed Rail to Hastings and Bexhill
Figure 5.3: Average house prices, Kent , 2013
Source: High Speed Rail in the South East, Greengauge 21, April 2014
Greengauge 21 analysis also demonstrated that recent house price rises (over 2011-2013) have been much stronger in the seaside towns of East Kent, which are served by HS1 services, than those in East Sussex, which are not. Folkestone, which has the fastest connection of the coastal towns to London using HS1, has had the highest rate of housing price growth. By contrast Bexhill, which has a very slow rail journey time to London, has recorded the lowest house price growth. Clearly, the housing market is influenced by myriad of factors, but Greengauge 21’s focus on high speed rail links appears justified as a positive influencing factor in housing market value and demand.
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Economic Case: High Speed Rail to Hastings and Bexhill
Figure 5.4: House price rises, 2011-2013, in the study area and Kent
Source: High Speed Rail in the South East, Greengauge 21, April 2014
The evidence gathered in the study supports the view that there will be an upsurge in demand from higher income earners who may now choose to locate in the area and commute to the capital and wider South East. The rail scheme is also likely to increase business investment and promote indigenous growth which will raise the average incomes of the existing population. One study noted that the impacts of accessibility on house prices suggests that time savings of between 1 and 15 minutes could be associated with increased house prices of between 0.4 and 5.4 per cent24. The impact of the service on house prices has not been modelled here as it would be difficult to isolate and convert into a meaningful economic value but the expectation would be that there will be a positive impact on residential property prices as demand for housing increases following installation of the high speed rail service.
24 Volterra and Colin Buchanan (2008) Economic benefits of the Metrolink extension. Manchester: Manchester Enterprises 60
Economic Case: High Speed Rail to Hastings and Bexhill
5.4 Visitor economy and potential growth
The employment growth attributed through analysis of employment land development (relating to B-use sectors) is unlikely to include many economic activities associated with the tourism and wider cultural sector, which is an important source of local employment and has been highlighted as having significant potential to grow further. The evidence gathered suggests that the rail scheme, alongside a carefully marketed tourism offer, could provide an additional uplift to visitor numbers and the visitor profile of the study area.
In particular, the consultation revealed that closer proximity to London and the wider South East could enable the study area to capitalise on the UK holiday and short break market, given the journey time savings would make the study area more appealing to those tourists that are ‘cash rich but time poor’. With a potential link to Europe via HS1 at Ashford International the area could also attract short stay overnight visitors from the near continent (Belgium, Holland, northern France, Luxemburg, northern Germany).
As highlighted in Section 2 the study area already has high level of visitors, at 9.7m per annum with the vast majority being tourism day visits (91%). The study area has a higher share of the South East domestic overnight and tourism day visits than inbound tourism, which is relatively small. The average expenditure per visitor is higher in the study area for overnight visitors but considerably lower for tourism day visitors. This supports the views gained in the consultation that currently day visitors do not tend to be from the more affluent areas of the South East and London. However, it will also partially reflect the tourism offer within the study area which is yet to diversify into higher value added activities.
Table 5.4: Study area trips and expenditure levels, 2012, as % of SE market and average expenditure Study area as % of SE tourism market Average expenditure per trip Trips Expenditure Study area South East Domestic overnight 4.5% 4.4% £162.5 £147.9 Inbound overnight 2.5% 2.6% £456.0 £435.7 Tourism day visits 4.2% 3.3% £26.9 £32.4
Source: Tourism South East figures
5.4.1 Tourism growth scenarios
There are no tourism foresight studies for the study area that examine in detail how the tourism industry may grow in the future. Therefore the approach here has been to develop a scenario based on the evidence gathered from those plans to enhance the tourism offer, as outlined in the core strategies, and from the qualitative research which has revealed significant scope for growing tourism and related cultural activities. The proposed service is likely to impact on visitor numbers by: providing a direct link to the capital and other key markets with reduced journey times that would attract additional visitors (and perhaps higher spending ones) and providing an opportunity to develop a tourism product linking, via the network, into other growth opportunities (such as Swanscombe Peninsula). Arguably this will enable the study area
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to capitalise more effectively on the trends and factors that are driving growth in the UK market and short break market given an improved proximity to London and the South East, in particular the key towns of Hastings, Rye and Bexhill. However, this will also depend on the overall tourism offer being improved through the planning and economic development policies.
Two growth scenarios for the study area have been developed to model the potential scale of impact that the rail scheme may have through influencing overnight visitor numbers up to 2028 (given this is the planning period for the core strategies). The scenarios have been developed as follows:
° Baseline scenario: – Overnight domestic and inbound tourism numbers are assumed to grow at 0.4% and 1.0% per annum across the South East region over 2013-2028. This is not overly optimistic and represents around half the growth that was experienced over 2004-2013 in the region. This enables a baseline growth scenario for the study area where the proportion of domestic overnight and inbound overnight tourism continues to be 4.5% and 2.5% respectively – therefore growth is largely driven by national economic trends.
° Growth scenario: – Overnight domestic and inbound tourism numbers grow at the same rate for the South East region but the study area is assumed to capture a higher share of the total domestic and inbound tourism market given the drive towards enhancing the tourism product and capturing a higher share of short breaks and weekend breaks. It is assumed that the overall shares could increase to 5% and 3% respectively.
5.4.1.1 Results
Table 5.5 displays the overall differences in visitor trips (overnight domestic and inbound) and the associated expenditure over 2013-2028. Clearly both scenarios incorporate significant growth with overnight visitors over the period increasing by 67,900 and 186,900 under the baseline and growth scenario respectively. The baseline trend growth rate of 0.4% per annum at the South East level appears reasonable given the studies that exist at a UK level looking to boost international tourism25.
25 Including Tourism: jobs and growth, Deloitte, undertaken on UK economy for Visit England, 2013 62
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Table 5.5: Tourism results – difference between baseline and growth scenario, study area Higher Higher Baseline growth Baseline growth Scenario scenario 2013 scenario scenario growth growth 2013 2028 2028 2013-2028 2013-2028 Domestic overnight trips, 000s 798.0 847.2 939.6 49.2 141.6 Inbound overnight trips, 000s 114.6 133.2 159.9 18.6 45.3 Total 912.6 980.5 1,099.5 67.9 186.9 Domestic overnight expenditure, £m £129.7 £137.7 £154.4 £8.0 £24.7 Inbound overnight expenditure, £m £52.3 £60.8 £72.9 £8.5 £20.6 Total £181.9 £198.4 £227.3 £16.5 £45.4
Source: Mott MacDonald using Tourism South East figures. 2013 figure for study area estimated from the growth trend at South East level. Average expenditure per trip has been assumed the same as 2012 level.
If the baseline scenario is based on the wider national trend then the potential higher growth scenario represents the ‘policy on’ scenario since it assumes the study area captures a larger share of the overnight tourism market from the South East given active efforts to develop the product and the investment in the rail scheme. Therefore to attribute a level of tourism growth to the scheme the economic impact associated with the difference in tourism expenditure between the two scenarios has been calculated, the results of which are shown below. Overall the extra £28.9m of tourism expenditure is estimated to directly support up to 530 jobs by 2028 and £17.7m of GVA, which will be a per annum benefit realised by 2028. Taking account of indirect and induced impacts this increases to 760 jobs and £28.2m of GVA as Table 5.6 illustrates.
Table 5.6: Economic impact of higher tourism growth scenario Total economic impact of uplift Scheme attribution level (difference between baseline and higher growth Type of impact scenarios) 10% 15% 20% 25% Overnight visitor expenditure uplift 2013-2028, £m £28.9 £2.9 £4.3 £5.8 £7.2 Gross jobs supported 535 53 80 107 134 (assuming £54,000 tourism expenditure level)26 Gross GVA, £m £17.7 £1.8 £2.6 £3.5 £4.4 (assumes average GVA per worker of £33,000)27 Indirect and induced visitor expenditure (assumed £12.2 £1.2 £1.8 £2.4 £3.0 as 42.1% of the total level)28
26 Assumes £54,000 of tourism expenditure is required to support one FTE within the industry, based on the latest report Tourism: jobs and growth, Deloitte, undertaken on UK economy for Visit England, 2013 27 Average GVA per worker is approximately £33,000 based on the latest report Tourism: jobs and growth, Deloitte, undertaken on UK economy for Visit England, 2013. 28 This is based on the ratio of indirect and induced expenditure to direct expenditure in the Hastings Tourism 2013 report, published by 63
Economic Case: High Speed Rail to Hastings and Bexhill
Total economic impact of uplift Scheme attribution level (difference between baseline and higher growth Type of impact scenarios) Indirect and induced jobs supported 225 23 34 45 56 (assumed to be £54,000)29 Indirect and induced GVA supported, £m (assumed £10.5 £1.1 £1.6 £2.1 £2.6 to be £46,800)30 Total jobs supported 760 76 114 152 190 Total GVA, £m £28.2 £2.8 £4.2 £5.6 £7.0
Source: Mott MacDonald
This modelling highlights that there is significant scope to deliver economic benefits through co-ordinated activity to develop the tourism industry given the baseline scenario growth rate used is fairly moderate. If the study area could capture a slightly higher share of overnight visitors then the returns would be even more significant. The rail scheme would undoubtedly play a role in stimulating this activity by attracting visitors from London and other areas of the South East who previously may not have considered short breaks or weekend stays. Overall it appears reasonable to attribute at least 10% of this uplift to the scheme, which would result in an overall impact of 76 jobs and £2.8m of GVA per annum by 2028.
5.4.1.2 Tourism day visits
Tourism day visits have not been considered in the analysis above given they appear to be fairly high in the study area, representing 4.2% of total South East trips. However, the average trip expenditure for day trips is fairly low (£27) compared to the South East (£32). Therefore we have assumed that under the higher growth scenario although the level of trips remains constant that there is a steady growth in spend per trip towards the expenditure per trip level of the South East by 2028 (compared to the baseline where expenditure per trip remains constant). This results in an annual expenditure impact of £48.5m by 2028 with a resulting impact of £47.3m of GVA and 1,300 jobs per annum (by 2028). This is considerable impact given the scenario assumes no growth in the actual core visitor numbers and highlights the potential impact higher spending visitors could have in the study area. The rail scheme is likely to contribute towards increasing tourism day spend by attracting higher spending tourists from London and other markets previously less well connected, however, it is not likely to be as influential since many tourism day trips currently originate from local areas surrounding the study area. Given these considerations the overall level of attribution to the scheme is assumed to be 10%, which results in £4.7m of GVA and 128 jobs per annum by 2028.
Tourism South East. 29 Uses the same expenditure ratio as for direct spend. 30 average GVA per employee of £46,800 based on the East Sussex 2013 total using ONS workplace GVA data coupled with BRES employee data 64
Economic Case: High Speed Rail to Hastings and Bexhill
Table 5.7: Economic impact of higher growth scenario – including tourism day figures Total economic impact Scheme attribution level 10% 15% 20% 25% Tourism day visitor expenditure uplift, 2013-2028, £m £48.49 £4.8 £7.3 £9.7 £12.1 Gross jobs supported (assuming £54,000 tourism 898 90 135 180 225 expenditure level)31 Gross GVA, £m (assumes average GVA per worker of £29.6 £3.0 £4.4 £5.9 £7.4 £33,000)32 Indirect and induced visitor expenditure (assumed as £20.4 £2.0 £3.1 £4.1 £5.1 42.1% of the total level)33 indirect and induced jobs supported assumed to be 378 38 57 76 95 £54,000)34 Indirect and induced GVA supported, £m (assumed to be £17.7 £1.8 £2.7 £3.5 £4.4 £46,800)35 Total jobs 1,276 128 191 255 319 Total GVA, £m £47.3 £4.7 £7.1 £9.5 £11.8
Source: Mott MacDonald. Same assumptions as before referenced in footnotes.
Overall the level of employment and GVA growth associated with the scheme from increased overnight visitors and increased tourism day expenditure levels is £7.6m of GVA and 204 jobs by 2028. If the visitor economy benefits were assumed to be fully realised shortly following the completion of the scheme, the net present value of those benefits, over a 30 year time period36, would be £85.0m.
5.5 Summary
There is significant growth and development planned for the study area through the existing planning framework, both B-use employment supported by the development floorspace targets and tourism growth, through promoting an enhanced tourism product and offer. The key research strands of this study demonstrate that the rail scheme is very likely to promote business growth, commuting and the visitor economy by directly addressing a key barrier to economic growth – connectivity. The benefits associated with the scheme are hard to quantitatively assess given the unknown factors at play in real economic markets, however, based on the evidence gathered relating to how the scheme can support the existing core strategy targets and the development of the visitor economy the overall impact is estimated to be in
31 Assumes £54,000 of tourism expenditure is required to support one FTE within the industry, based on the latest report Tourism: jobs and growth, Deloitte,undertaken on UK economy for Visit England, 2013 32 Average GVA per worker is approximately £33,000 based on the latest report Tourism: jobs and growth, Deloitte, undertaken on UK economy for Visit England, 2013. 33 This is based on the ratio of indirect and induced expenditure to direct expenditure in the Hastings Tourism 2013 report, published by Tourism South East. 34 Uses the same expenditure ratio as for direct spend. 35 average GVA per employee of £46,800 based on the East Sussex 2013 total using ONS workplace GVA data coupled with BRES employee data 36 Using the same time horizon assumptions as in the modelling of the employment land benefits but with the assumption that benefits build up more slowly from the opening of the scheme in 2019. 65
Economic Case: High Speed Rail to Hastings and Bexhill
the range of annual benefits of 629 jobs and £27.4m in GVA per annum. Over a 30 year horizon from the scheme being completed the present value of such benefits would amount to £354.3m.
Table 5.8: Summary – quantified economic benefits Area of impact Annual impacts - by 2028 Regeneration benefits 425 jobs and £19.9m GVA 67 temporary construction jobs Visitor economy benefits 204 jobs and £7.6m of GVA Total benefits 629 jobs and £27.4m of GVA Present value, assuming 30 year horizon 2015-2044 and 3.5% discount factor £354.3m
Source: Mott MacDonald. Note figures may not appear to add due to rounding to one decimal place.
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6 Agglomeration benefits and labour supply impacts
6.1 Introduction
This section assesses the potential agglomeration benefits and labour supply impacts of the proposed scheme given the improved connectivity to London using WITA (Wider Impacts in Transport Appraisal). WITA is software originally developed by Mott MacDonald for the Department for Transport. It calculates wider impacts in accordance with the methods set out in WebTAG Unit A2.1. For the current study, WITA has been used to calculate two specific impacts:
° Agglomeration benefits: Agglomeration refers to the concentration of economic activity over an area; the closer firms are to each other and to the supply of workers, the greater the level of agglomeration. Transport improvements can increase the accessibility of an area to a greater number of firms and workers, thereby increasing the level of agglomeration. Evidence shows that increased agglomeration improves productivity and therefore increases Gross Domestic Product (GDP).
° Labour supply impacts: when deciding whether or not to work an individual will weigh the wage rate of a job against the cost of travelling to it (where cost includes travel time). A reduction in travel costs will increase the gains to work and therefore the number of people who will be willing to work at a given wage rate, i.e. the labour supply increases. This in turn will increase GDP.
Elements of the above impacts, particularly on labour supply, are already captured by the conventional economic appraisal process (for example in people’s value of travel time savings for their commute to work). WITA follows the DfT methodology in only calculating those impacts that are additional to those already captured in the conventional appraisal. In particular, the labour supply impact only includes the impact on government tax revenues; the direct benefit to workers is assumed to be captured by the value of travel time savings to commuters in the conventional user benefit appraisal.
WITA can also calculate two further impacts, which have not been included in the current study:
° Move to more or less productive jobs: changes to the transport system can affect where firms locate and where workers choose to work. This can have implications for the level of productivity and GDP. However, calculation of this impact requires a land use-transport interaction model that can predict how these location choices might change in response to the schemes; such a model is not available for the current study. In any case, DfT guidance is for the core wider impacts assessment to exclude this impact.
° Increased output in imperfectly competitive markets: this is simply calculated as 10% of the business user benefits from the conventional economic appraisal. This information is not included in the pre-GRIP appraisal summary and therefore it isn’t possible to formally estimate this particular wider impact.
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6.2 Data analysis
WITA requires two types of input data. The first is a variety of economic data by local authority area, such as GDP per worker by industrial sector and number of people in employment. This was all obtained from the standard ‘wider impacts’ economic data set provided by DfT (version 2.5, issued in January 201437).
The second type of input data is from a transport model that includes the cost of travel between different areas, with and without the transport scheme, as well as information on the number of trips by mode. This cost data includes travel time (including waiting time) and fares. Permission was obtained from HS2 Ltd to use the version of the PLANET rail model that has been used for the calculation of wider impacts for the HS2 scheme. PLANET is a full multi-modal model that includes rail, car, and air modes.
All the ‘do-minimum’ (without scheme) data was taken from the PLANET model. The ‘do-something’ (with scheme data) was created by adjusting the do-minimum rail travel time data to reflect the impact of providing high speed services to from London St Pancras to Hastings and Bexhill.
The main impact of the schemes come from changes in journey times, frequencies and the number of interchanges required for travellers from Bexhill/Hastings to Ashford and on to London. There are potentially fare impacts as well. The assumed characteristics of the two current main routes to London and the proposed scheme are as follows38:
Table 6.1: Characteristics of routes Journey Commuter Business Frequency time Changes fare 39(£) fare (£) Route (mins) (mins) required Hastings to London Bridge via Tonbridge (current) 30 95 0 9.80 28.80 Hastings to St Pancras via Ashford (current) 60 105 1 12.40 34.20 Hastings to St Pancras via Ashford (future) 6040 69 0 12.40 34.20
The impact on a given traveller will depend on whether they currently travel from Bexhill/Hastings to London via the Tonbridge route, or currently travel to Ashford to pick up HS1. As an approximation we have assumed that the majority of travellers currently use the Tonbridge route since it is faster and cheaper than going via Ashford.
37 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/275844/tag-workbook-wider-impacts-dataset.xls 38 We assume that the number of rail travellers between Hastings and London using the Haywards Heath route is negligible. 39 Fares is average fare per trip (each way), based on the season ticket cost for commuters, or Anytime day return for business travellers. Values are in 2014 prices. 40After scheme opening it will also be possible for travellers to go to Ashford by non-HS1 services, then interchange to HS1 to travel to London. This offers, in theory, a 30 minute frequency on this route to London. However, given the difference in journey times and the need to change trains we do not believe this will be an attractive option to travellers and we assume that they all use the direct, hourly service. 68
Economic Case: High Speed Rail to Hastings and Bexhill
The above times do not include egress (or access) times between the London station and the final destination. We have assumed that, on average, these do not change if people switch from using London Bridge to using St Pancras.
The rail industry standard forecasting procedure (PDFH v5 – the Passenger Demand Forecasting Handbook) sets out ‘service interval penalties’ (SIP) for different frequency levels. These represent a time- equivalent cost for the time spent waiting for services. There is also an interchange penalty, which is the time-equivalent cost of having to change between services.
PDFH therefore allows us to convert the combined effects of frequency, journey time, interchanges and fare into a single time-equivalent value, referred to as the generalised journey time (GJT). The savings in GJT associated with the enhanced service (depending on the current route being used) are shown in Table 6.2 below, along with the increases in fares.
Table 6.2: Changes in GJT and fares with high speed services extension. GJT saving (mins) Commuter fare Business fare Current route increase (£) increase (£) Hastings to London Bridge via Tonbridge 26 2.50 5.50 Hastings to St Pancras via Ashford 66 0 0
We have assumed that fares increase by 1%pa in real terms, consistent with the assumptions built into the HS2 model.
WITA is constrained to operate at the same zoning system as the PLANET model. The PLANET model zones affected are:
Table 6.3: PLANET model zones Zone number Zone name Key rail stations in zone 17 Brighton & Hove Brighton 69 East Sussex Bexhill, Hastings, Rye 102 Kent Ashford & Shepway Ashford International 104 Kent West Ebbsfleet International 119 London North East Stratford International 117 London Central London St Pancras
Given the extent of the East Sussex zone, not all travellers within the zone will benefit directly from the scheme. Based on the populations served by the stations at Bexhill, Hastings, and Rye we estimate that 17% of rail travellers in East Sussex will benefit.
The analysis has assumed that all options would open to passengers in 2019. We have calculated benefits over the WebTAG standard 60 year appraisal period.
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6.3 Results
Table 6.4 sets out the wider economic benefits calculated by WITA. The agglomeration benefits are split between four industrial sectors.
Table 6.4: Wider economic benefits by option Present value of benefit over 60 year appraisal period. Type of Benefit 2010 prices discounted to 2010 Agglomeration - manufacturing £ 4.9m Agglomeration - construction £ 7.4m Agglomeration - consumer services £ 22.2m Agglomeration - producer services £ 84.4m Agglomeration - Total £ 118.9m Labour supply impact £ 4.9m Total £ 123.7m
Source: WITA outputs. 2010 prices discounted to 2010
It can be seen that the labour supply impact is much smaller than agglomeration. This is typical of wider impacts results; it is almost always the agglomeration benefit that dominates.
Within agglomeration it is the producer services sector that has the most benefits, followed by consumer services. This is also typical and is a consequence of two main factors: (a) these are the two sectors with the highest level of employment and the highest levels of GDP in the base, and (b) GDP for producer services is much more sensitive than other sectors to changes in the level of agglomeration.
6.4 Summary
We have used DfT’s WITA software to calculate agglomeration and labour supply impacts of high speed rail services to Hastings and Bexhill. We estimate that agglomeration benefits, at a UK level, will be £118.9m and labour supply impacts £4.9m (2010 prices discounted to 2010 using a 60 year appraisal period).
These benefits are modelled using DfT’s WITA software that works out the benefits from enhanced connectivity between zones and produces wider economic benefits that contribute to transport business cases. As the modelling draws on data owned and managed by DfT there is no ability for the results to be revisited although they do add to the substantiation of business cases.
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7 Key Conclusions
7.1 Introduction and scheme proposals
This study has investigated and assessed the strategic economic case for extending the direct high speed rail Javelin service from London St Pancras to Hastings and Bexhill, via Ashford, reducing journey times considerably (from 1hr31 minutes from St Pancras to Hastings to 1hr8 minutes).
The implementation of high speed services to Hastings and Bexhill will provide a step change in accessibility via reducing journey times considerably to London and its surrounds and the connections to the national network in general. Figure 7.1 below displays the HS1 network that the Marshlink line would directly connect into (with no stopping) and those key locations en-route that will become more accessible to the study area and its residents/businesses. This will provide a significant journey time saving to London compared to the Tonbridge and East Coastway services. The services at St Pancras will provide direct onward links to Midland Main Line services and East Coast Main Line services at Kings Cross. Clearly the proposed service will enhance direct connectivity between the study area (Hastings and Rother local authority areas) and London and its surrounds.
Figure 7.1: Strategic transport network the new service will directly access
Source: Mott MacDonald
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The economic case has been assessed through the following key strands of research: ° Economic context and literature review – relevant economic development and planning documents have been reviewed alongside the existing evidence pertaining to the economic benefits accruing to similar schemes elsewhere (covered in Appendix B). ° Consultation – consultation with economic development and regeneration specialists, business groups, education representatives and the commercial property sector to ascertain views on the strength of the link between the rail investment and future growth in the study area. ° Economic modelling – of the tourism benefits, land utilisation and overall potential economic benefits. ° Wider Impacts in Transport Appraisal analysis - an assessment of the agglomeration and labour productivity benefits using the WITA model (designed by Mott MacDonald).
7.2 Economic context – challenges and growth planned
7.2.1 Key challenges of study area
Hastings and Bexhill face significant economic challenges with a local economy over-dependent on the public sector and characterised by low value low wage activities, poor economic participation levels and severe pockets of deprivation. These characteristics are deeply rooted in economic history, namely the decline of seaside tourism from the 1960s. The lack of business investment and job opportunities has resulted in outward migration of younger and skilled residents and relatively low demand for housing. A process of selective migration has been taking place with the in-migration of retired persons and the economically in-active (and benefit dependent) which furthers deters investment and the attraction of higher income groups. Under investment in strategic infrastructure linking the area to key areas of economic growth in London and Kent has also constrained business investment and labour market mobility.
7.2.2 London and its surrounds – the big picture
The South East and London economies will continue to drive national economic growth over the coming decades. In 2011, those that lived and worked in London were supplemented by almost 800,000 commuters into the capital, equivalent to around 16% of jobs in London – an increase of around 100,000 over the last decade or so41.
It is likely that in the future more and more people will choose to travel to work in London as they move out of the capital and seek more affordable homes outside in less densely populated and/or more affordable locations. Over time the ring of journeys to work around London is likely to get even larger and areas such as Hastings and Rother will become more attractive as locations to live in and commute to London from.
41 London Labour Market Projections, GLA Economics, April 2013 72
Economic Case: High Speed Rail to Hastings and Bexhill
Figure 7.2: Travel to work flows into London from South East and East of England, 2011 (excluding intra London trips
Source: 2011 Census, Mott MacDonald. Refers to commuters from Middle Super Output Areas (MSOAs). Excludes internal London journeys.
Businesses within the SE LEP area currently supply a wide range of goods and services to the capital in various sectors such as logistics, the creative industries, manufacturing and a range of back office functions. In the 21st Century the Thames Gateway and the South East LEP area as a whole will be London’s premier expansion location and the prospects for sectors linked to the London economy are strong.
There are a number of key growth opportunities identified by the SE LEP that the study area will be better connected to following implementation of high speed rail, which are visually shown below against the key growth corridors.
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Economic Case: High Speed Rail to Hastings and Bexhill Final Report
Figure 7.3: Transport Growth Corridors / areas and those growth opportunities now directly linked via the proposed service. A2/M2 Thames Gateway Kent – Includes some of the UK’s most important locations for growth which will now be directly linked to Hastings and Bexhill including:
- Ebbsfleet Garden City – planned housing project between Ebbsfleet International and Bluewater planned to create 20,000 jobs and deliver 15,000 homes. - Major theme park and visitor destination planned nearby at Swanscombe Peninsula offering the prospect of a further 27,000 jobs.
M20 London- Maidstone – Ashford – Ashford is central to the economic expansion of East Kent and is set to expand over the next decade more than any other Kent district. Over 2001 and 2011 more than 7,500 jobs created and this rate is set to continue, underpinned by creation of new Garden City. Several key developments including Ashford Commercial Quarter (adjacent to Ashford International) – major office and retail development – and Ashford International College.
Source: South East LEP: Growth Deal and Strategic Economic Plan, Mott MacDonald
345375/TPN/ITD/Final/4 October 2015 74 P:\Liverpool\ITD\Projects\345375 High Speed Rail Hastings and Bexhill\2. Docs Out\151001 Final report_v4.docx
Economic Case: High Speed Rail to Hastings and Bexhill
7.2.3 Regeneration and growth plans of study area
Significant and successful investment to regenerate and address the economic challenges of the study area has already occurred. This includes investing in modern sites and premises, the Higher Education offer and a cultural and tourism offer to attract businesses into new sectors of the economy and encourage economic activity.
There is a high sense of momentum behind these regeneration efforts which are continuing to reinvent the area and the completion of the Bexhill-Hastings Link Road will provide a further boost to local connectivity. New and growing sectors of the economy are emerging and high profile business investments, such as Saga’s insurance operations in 2011, are proving that the study area is developing a competitive commercial offer within the region. The economic development policy of the study area is perhaps best captured by the action areas of the Hastings and Bexhill Task Force Six Point Plan.
Figure 7.4: Hastings Bexhill Six Point Plan
Urban Renaissance
Image Transport Economic Regeneration Hastings and Bexhill Task Force Six Point Plan Enterprise Skills growth
Broadband
Source: Hastings and Bexhill Task Force Six Point Plan
The Rother Local Plan: Core Strategy and Shaping Hastings - The Hastings Planning Strategy 2011 – 2028 set out the planning strategies for both boroughs over 20011-2028. Both strategies were informed by the Hastings and Rother Employment Land Review and Update 2011 which provided the basis for the floorspace estimates through its labour supply analysis. Overall through active policy intervention the total jobs growth over the planning period was established as 11,600 jobs (5,100 in Hastings and 6,500 in Rother) over 2011-2028. In business floorspace terms this translates into a gross floor space requirement of 100,000m² and 70,000m² for Rother and Hastings respectively.
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Table 7.1: Rother and Hastings - approximate development levels 2008-2028 Housing Employment (B-use employment space) Rother – total At least 5,700 dwellings 93,000 – 103,000m² Hastings – total At least 3,400 net additional dwellings Up to 70,000 m²
Source: Rother Core Strategy, Shaping Hastings
The A21/A259 Hastings Bexhill Growth Corridor is one of 12 growth corridors/areas identified by the SE LEP that contains the major opportunity sites for investment and those that will help achieve the growth targets above. The sites comprise a mixture of B1 and B2 developments with major commercial opportunities being North East Bexhill, which will be developed following the link road, and the Priory Quarter. Many of these developments are ready to proceed and provide large scale accommodation in the context of a regional market with a shortage of sites and premises to meet such requirements.
Figure 7.5: A251/A259 Hastings Bexhill Growth Corridor – key development sites
Source: Various planning documents, Mott MacDonald
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7.3 Scale of economic impact
Delivery of high speed services to Hastings and Bexhill is a strategic infrastructure investment which will dramatically improve connectivity with London, the South East and the rest of the country. The service would enable connectivity, a key barrier that can be addressed directly by the public sector, to be dramatically improved. In isolation such investment would be ineffective but alongside the study area’s comprehensive approach to economic regeneration that proactively addresses other key challenges is likely to be very effective.
The evidence gathered through the economic context and literature review and consultation indicates that the service is likely to impact on the economic performance through four key routes. In each case improvements in service would be expected lead to improved perceptions of Hastings and Bexhill as locations for business, residence and as a place to visit. Across each of these impacts, the present image of Hastings and Bexhill as having poor connectivity will be challenged. In its place a refreshed view of Hastings and Bexhill as a dynamic, changing area will percolate to investors, would-be residents and potential visitors. ° Business investment and growth: The service will impact on the investment proposition of the area and promote indigenous business growth through the improved connectivity to key markets in the South East, London and even nationally which will reduce business costs (supply side effects). There is a strong body of research that supports the consultation findings that poor connectivity in the study area is a major barrier to business investment. For instance market research with businesses and potential investors in Hastings identified that transport links are a ‘deeply entrenched and major barrier’ to choosing Hastings as a town to expand or relocate to42. This is likely to alter the spatial pattern of regional economic activity with the study area now able to compete more effectively for investment in a range of sectors. This includes building on the strengths of existing clusters such as advanced manufacturing and associated technical services, the creative and cultural sector and professional services that could be outsourced from London and its surrounds. Given the significant regeneration efforts to date the commercial property supply within the study area has now been modernised and is ready to absorb additional demand that could be created from the scheme improving connectivity. Business productivity will also be enhanced through allowing more economic activity to concentrate, at high density, in a particular place and by allowing increased specialisation to occur (which the WITA analysis examines in the following chapter). ° Provision of new commuting opportunities: The service will now provide a viable commuting opportunity between the study area and London and its surrounds. The journey time savings places Hastings and Bexhill at the brink of what is considered a sensible commute (68 mins. to Hastings and 78 mins. to Bexhill) and opens up an entirely new proposition to those high income earners working in London and its surrounds who may choose to reside in the area given the relatively low property prices and quality of life benefits. The inward migration of such groups will in turn raise average incomes in the study area. At the very least the service is likely to at least substantially increase part time commuting of higher income earners. The attraction of working age commuters will provide benefits in
42 Establishing the Image of Hastings, Hastings Borough Council, CW Research, March 2010 77
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terms of stimulating demand for local services, housing in the area and changing the dynamics of the labour market over the longer term. ° Visitor economy and growth: The service also presents the opportunity to enhance and build on the strengths of the existing visitor economy via promoting links to new markets within London itself but also further afield given the significantly improved onward connections to the north east of London, to the rest of the country and those key European markets along the HS1 network. Overall the study area, given its existing tourism strengths, is likely to become a significantly more attractive destination for weekend and short breaks. ° Image and perception: The area would benefit hugely from the proposed extension into East Sussex and would challenge the perceived perception of the area, especially in other parts of the country, including London, as having poor connectivity and not being dynamic.
7.3.1 Significant impacts – key results
The impacts have been modelled by assessing the benefits that could emerge from land utilisation impacts through increased business investment (inward and indigenous) and increasing the volume and profile of visitors to the study are and the WITA analysis of agglomeration and supply-side effects. Overall the proposed scheme could make a significant contribution to the Hastings and Rother economies through the following identified benefits:
° Regeneration and economic benefits through directly supporting the land utilisation planned for in the core strategies. The provision of high speed services provides an opportunity to support and facilitate the study area’s core strategy targets within the existing spatial planning framework. Overall the following benefits attributable to the rail service could occur for the study area: – 425 jobs and £19.9m of GVA per annum by 2023, equivalent to £269.3m of GVA over a 30 year time horizon (2015-2044). – 910 dwellings over the planning period with an associated capital expenditure of £91.0m, creating 67 temporary construction jobs.
° Visitor economy benefits from stimulating overnight trips and increasing the tourism spend of tourism day trips, equivalent to 204 jobs and £7.6m of GVA pa by 2028.
° Agglomeration and labour supply benefits amounting to £123.7m of GDP over a 60-year appraisal period (at a UK level). These benefits related to agglomeration benefits of £118.9m which values the extent to which the rail service improves the accessibility of an area to a greater number of firms and workers and labour productivity benefits of £4.9m relating to the benefit the rail service has on labour supply through reducing the cost of travelling and therefore increasing the number of people will to work at a given wage rate.
° Other qualitative benefits relating to dramatically improving the image and perception of Hastings and Bexhill as a business location and supporting the education sector through enhanced accessibility for students and staff. Addressing connectivity is an important milestone in the Hastings Bexhill Six Point
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Plan and will help stimulate delivery against the other key pillars (image, urban renaissance, skills, broadband and enterprise growth).
Taking into account all benefits assessed, the high speed services could provide regeneration and economic benefits for the study area in the range of £354.3m of GVA over a 30 year horizon (2015-2044).
Table 7.2: Summary – quantified economic benefits Area of impact Impacts Study area: Regeneration benefits – per annum (realised fully by 2028) 425 jobs and £19.9m GVA Visitor economy benefits – per annum (realised fully by 2028) 204 jobs and £7.6m of GVA Total regeneration and economic benefits – per annum (realised fully by 2028) 629 jobs and £27.4m of GVA Present value, assuming a 30 year time horizon (2015-2044) and a 3.5% discount factor £354.3m of GVA UK level: Agglomeration (2010 prices discounted to 2010 using a 60 year appraisal period) £118.9m of GDP Labour supply impact (2010 prices discounted to 2010 using a 60 year appraisal period) £4.9m of GDP Total GDP contribution £123.7m of GDP
Source: Mott MacDonald, excludes temporary construction jobs.
These are significant wider economic benefits considering the scheme is anticipated to cost in the range of £150m43. The benefits identified here do not consider the user benefits that will come forward from the conventional economic appraisal of the scheme calculated through journey time savings which are expected to be positive as well. By way of comparison Table 7.3 below summarises benefits identified in other studies. Overall the level of benefits assessed here compare well and high speed rail services to Hastings and Bexhill have a strong wider economic benefits business case.
Table 7.3: Comparison to wider economic benefits identified in other studies (rail and other transport) Study title Key findings Economic impact of High Speed 1, • Attributed 5% of employment land benefits associated with schemes Final Report, Colin Buchanan (in connected with HS1 (in Kings Cross, Stratford, Ebbsfleet and Eastern Quarry, conjunction with Voleterra), January which collectively accounted for 87,300 gross jobs). 2009 • In total £200m of GVA per annum compared to £27.4m per annum figure assessed for this scheme. • Given the significant scale of HS1 (£7.3bn cost) compared to this scheme (£150m initial estimate) the wider benefits identified here are in comparison very high. Bexhill-Hastings Link Road • Main benefits related to the employment floorspace released at NE Bexhill – Regeneration Statement, April 2007 approximately 2,000 jobs. This compared to scheme cost of £113m. • This is a much higher level of benefit but because the link road will directly open up the North East Bexhill employment land which would not be accessible without the scheme.
43 This figure was mentioned at the Inception Meeting for this study and should be taken as a broad, illustrative estimate subject to further work by Network Rail which is ongoing. 79
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Study title Key findings Wider Economic Benefits of a Rail • Land utilisation benefits of 161 jobs and £9.0m of GVA per annum based on Service Between March and Wisbech, Mott MacDonald analysis in 2014. Cambridgeshire County Council by • In 2014 the anticipated scheme cost was c£52.6m. Following the GRIP2 work Mott MacDonald, March 2014 by Mott MacDonald in 2015 the range of cost is approximately £70m to £111m including risk and optimism bias (£41m-£65m excluding risk and optimism bias). Further detail available at: http://www.railmagazine.com/news/2015/08/17/wisbech-re-opening-could-cost- over-100m (Accessed 29.09.15) • The Benefit Cost Ratio is 2.27 which rises to 4.41 when wider economic benefits are included • The Bexhill-Hastings scheme is likely to be more expensive but also likely to deliver a greater level of benefit. The analysis in this report would feed into the wider economic benefits part of the BCR. Wider Economic Benefits of Improved • Land utilisation benefits of 1,150 jobs and £46.0m of GVA per annum. Total Rail Frequencies, Norfolk, Suffolk and scheme costs not identified and individual routes being brought forward for Cambridgeshire County Councils by funding currently Mott MacDonald, July 2012
Source: Mott MacDonald
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Appendices
Appendix A. Planning background and settlement analysis ______82 Appendix B. High Speed Rail literature review ______86 Appendix C. Consultee list ______95
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Appendix A. Planning background and settlement analysis
A.1 Introduction
This section provides an overview of the key planning strategies for Hastings and Rother, the growth plans for those settlements which lie on or near the proposed route and the key growth plans for the tourism sector. The analysis is based on the strategic planning documents for Rother and Hastings and other studies to assess the broad economic context/history (including recent regeneration), planned levels of growth and key locations / developments supporting growth for Hastings, Bexhill, Rye and Battle. The consultation findings have also informed the analysis.
A.2 Hastings – core strategy
The overall planning vision for Hastings is: “By 2028 Hastings, founded upon our unique heritage, natural environment and seaside location, and supported by social, economic, cultural and environmental regeneration will be a safe and thriving place to live, work and visit, that offers a high quality of life, and has a strong economy and sustainable future”.
The key strategic objectives of the planning strategy centre around achieving and sustaining a thriving economy, ensuring everyone has the opportunity to live in a decent home, safeguarding and improving the town’s environment, addressing the impacts of climate change, supporting sustainable communities, providing an efficient and effective transport system and making best use of the Seafront and promoting tourism. These objectives will be fulfilled by the following development strategy for the borough:
Table A.1: Hastings Planning Strategy – development strategy Area Key Details Housing • Between 2011 and 2028 the net new homes target will be for at least 3,400 homes. The target is equivalent to at least 200 net new homes per annum. • Future housing requirements will need to be met essentially through the identification of development opportunities in the urban area; by including an allowance for windfall development; and by making more efficient use of the existing residential stock by bringing back into residential use long term empty homes. • The demand for new housing arising from trend-based population and household change and growth would result in a much higher requirement of 404 per year. Employment • If it was not for regeneration activity and major intervention, it is forecast that total employment (labour demand) in Hastings would grow by very modest amount. Labour demand forecasts suggest that jobs growth will be in mainly public services, including public administration, health and educational sectors. This reflects their important share of employment currently and ignores the considerable regeneration activity which has already seen the successful development of educational, media and eco-industries. It also clearly highlights the need to diversify the town’s economic base and a key objective of increasing the supply and range of job opportunities across the town, as part of achieving a more sustainable pattern of development and activity. • The Employment Strategy and Land Review (ESLR) estimates that the total number of jobs needed in Hastings over the period 2008-2028 is c.6,470. This is based on achieving higher economic activity rates and a closer balance between the number of indigenous jobs and the number of local workers. In sustainability terms a better balance of homes and jobs locally is desirable. • The Planning Strategy therefore aims to assist employment creation through the provision of land and premises for employment purposes and by encouraging the development of more family housing
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Area Key Details • The aim is to maintain and strengthen the provision for those sectors with particular strengths such as manufacturing and specialist engineering businesses. Examples of which are vacuum pumps and contact lens manufacture. The strategy will also support cultural and artistic ventures. Sectors, and particularly high value sectors, including knowledge-based sectors such as eco-industries and creative media. • In order to meet the economic regeneration objectives for Hastings and Rother, provision should be made in Hastings for between 65,000 and 70,000m2 of employment floorspace between 2008 and 2028. This target primarily relates to business accommodation. Local economy • Tourism and visitors - the Council will work to promote and secure sustainable tourism development in the town. A more diverse and high quality tourism offer will be encouraged that seeks to lengthen the tourism season, increase the number of visitors, provide job opportunities and sustain the tourism economy. Transport & • The transport priority is to improve strategic access by road and rail to reduce the town’s relative Accessibility isolation and open up areas for housing and business development. • The Council will seek the earliest possible implementation of the following road and rail schemes that will reduce peripheriality, and support the regeneration of Hastings:
Source: Shaping Hastings
A.3 Rother – core strategy
The relevant strategic objectives (under each theme) for the core strategy, underpinning a vision focused on Rother being recognised for its high quality of life and improving sustainable economic building, are: ° Overall spatial strategy - to achieve a pattern of activity and development that contributes to the Sustainable Community Strategy, the ‘Spatial Vision’ and particular local circumstances and environmental resources. A large part of further employment land supply will be mixed-use development sites at North East Bexhill and simply allocating sites will not be sufficient given relatively weak commercial property market. The possibility for further opportunities for sustainable housing development arising over time cannot be ruled out; hence, the requirement is expressed as a minimum for the purposes of plan-making. The degree of growth at Battle and Rye is moderated due to the high environmental factors that bear upon them. ° Bexhill - to strengthen the identity of Bexhill and for it to become one of the most attractive places to live on the south coast. ° Hastings fringes - to provide attractive and accessible fringes of Hastings. ° Rye - to improve the economic and social well-being of Rye. ° Battle - to support the market town and tourist centre role and character of Battle. ° Economy - to secure sustainable economic growth for existing and future residents and provide greater prosperity and employment opportunities for all. The majority of the 6,300 jobs growth (as identified above) will be in financial and business services, other (mainly public) services, distribution, hotels and catering, and construction. ° Transport and accessibility - to provide a higher level of access to jobs and services for all ages in both urban and rural areas, and improve connectivity with the rest of the region. Support will be given to the improvement of strategic infrastructure that will strengthen the role of Rother, and especially Bexhill, as an area of economic activity and investment opportunity. This includes working with
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agencies to upgrade the capacity and capability of the East Coastway and Hastings to London rail corridors.
A.4 Settlement analysis
The following provides an overview of the growth and development plans for Hastings, Bexhill, Battle and Rye based on the core strategies for Rother and Hastings.
Table A.2: Settlement analysis – key growth and development plans Settlement Key growth plans Hastings • Future development will be spread around the town. • Key seafront developments at West Marina will be identified. • The Queensway Employment Corridor (within the Western Area) will also aim to attract companies from around the UK and Europe, and growing the environmental technologies and services sector, as well as others who place importance on environmentally sustainable business. • A significant amount of regeneration monies have been focused on the town centre to address deprivation issues in Central St. Leonards & Bohemia and Hastings Town Centre. This includes improving the education offer at the University of Brighton Hastings Campus and the new Sussex Coast College. In addition, the new office and retail developments at the Priory Quarter will ensure the quality of space available is improved. • Significant potential for building on the existing cultural offer in both St Leonards and Hastings town centres (considered more fully in Section 6).
Bexhill • Main focus of development in Rother. • Coastal location and relatively poor transport links limit the town’s commercial market potential. • Approach is to stimulate the market, support the growth of local firms and attract investment. • Geographical focus on North East Bexhill (major urban extension to the north east of the town) – new strategic employment sites associated with construction of the Link Road. • Some potential for housing development within the existing built-up area as well as sites and broad locations around the northern and western edges of the town. Battle • Combination of its AONB designation, historic core and accessibility limitations make a high level of future growth for Battle inappropriate. • Appropriate residential development and well as limited expansion of employment and retail floorspace will be permitted to support the town’s role as a service centre for residents and residents of surrounding villages. Rye • Opportunities for further development at Rye are very limited by its historic form and topographic setting, as well as the virtual enveloping presence of international nature conservation designations, the AONB and flood risk areas (which also affect parts of the town itself). • The strategy for Rye and Rye Harbour is to retain and strengthen the role of Rye as a service centre supporting retail, culture and social infrastructure; provide modest and balanced employment growth to create jobs and opportunities to meet the needs of existing and new residents. There should be quality year round employment, with less reliance on seasonal/tourist activity and promotion of green tourism opportunities. • Consideration will be given for residential development within the built up area while acknowledging and being sympathetic to the historic core and character of the town. • Employment provision will focus on Rye Harbour industrial estate and consolidating the activities of the Port of Rye. Hastings • Limited development with strategy focused on conservation.
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Settlement Key growth plans Fringes
Source: Shaping Hastings and Rother Core Strategy
A.5 Tourism and cultural sector
Given its importance to the study area economy tourism and cultural activities have also been well planned for in the core strategies of Hastings and Rother. The renaissance in the UK holiday market and the emphasis by the government on increasing inbound tourism means the South East, with a relatively favourable climate, and good proximity to London, could be a major beneficiary of these trends. Local policy aims to promote the tourism and cultural sector of Rother and Hastings through enhancing the visitor offer and increasing visitor spend by attracting more overnight visitors, particularly overseas visitors. There are several areas of focus which are summarised below by settlement:
Table A.3: Tourism industry and cultural activities – key growth plans Heading Right Rye • Promoting the town’s role as a visitor centre and develop leisure and tourism attractions at Rye Harbour Nature Reserve. • Promote green tourism initiatives within the local economy – attracting high value firms to the town. Bexhill • Enable growth in sustainable tourism by allowing the development of new tourist accommodation, particularly by the conversion and extension of suitable properties closely related to the town centre. • Provide hotel accommodation, well related to the town centre and/or the De la Warr Pavilion. • Research has identified the potential for hotel investment to support the role of the Pavilion. Hastings • Support the growth and development of the tourism industry in Hastings by retaining and encouraging day visitors and attracting high spending staying visitors, maximising the value of visitor spend and spreading tourist activity throughout the year. • Maximise the potential of the Seafront enhancing the quality of life of local residents and improving the attractiveness of the town to tourists and visitors and support new business investment. To be used to forge and strengthen the cultural experiences on offer – outdoor festivals, cafes and pubs, galleries and museums etc. The seafront is central to the town’s economy and identity and further development of its potential will have a catalytic effect on the wider regeneration of the town. • Encourage the retention and development of good quality tourism accommodation combined with an active programme of arts and cultural events and festivals. • Securing a sustainable future for Hastings Pier, the redundant White Rock Baths and other key landmark sites along the Seafront such as St Mary in the Castle and West Marina. • Encouraging artists and related tourists and visitors through increasing opportunities for vibrant art and craft studios, markets, chalets and retail. • Helping to promote water based leisure, including the coastal based sports clubs. • The development of Combe Valley Countryside Park and the extension of the National Cycleway Network, together with future development at West Marina, will also promote the importance of the Bulverhythe and West St Leonards areas as the western gateway to the town. • Development of cultural quarters at the Old Town and The Stade, making the most of the fishing industry, its museum and the Jerwood Gallery. • Consider the potential for future language schools in the town – example of link between education and tourism and cultural sector.
Source: Shaping Hastings and Rother Core Strategy
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Appendix B. High Speed Rail literature review
B.1 Introduction and background
This section provides a literature review of the observed impact of High Speed 1 in the UK and high speed rail in other countries as important context for the study and to assist with assessing the growth attributed to the high speed services proposed.
High Speed 1 is the first high speed rail line constructed in the UK, and full services commenced on it in December 2009. These services include international services, mainly to Paris and Brussels, as well as domestic services from south east Kent to London (with intermediate stops). Travellers between domestic stations (e.g. between London and Ashford) are served by the high speed ‘Javelin’ domestic services as they are not permitted to use international services. Whilst high speed rail is relatively recent in the UK it has been in existence in France since the 1980s and Japan preceding that. High speed networks have also been constructed in the Netherlands, Belgium, Germany and Spain. The purpose of this review is to examine the observed economic impacts of existing high speed services with a particular interest in the impacts on ‘intermediate’ towns and cities. ‘Intermediate’ in this sense refers to locations served directly which are not major urban centres (e.g. Ashford in the English context) or indirectly (e.g. Canterbury in the English context), but are not major metropolitan centres (e.g. London, Paris, Brussels and Amsterdam).
B.2 High speed rail and economic performance
Transport investments providing step-changes in accessibility, such as high speed rail, affect regional economic performance in four specific ways: ° by reducing the costs of undertaking business, this is what economists term supply side effects; ° by strengthening business performance through the provision of new commuting opportunities; ° by strengthening the performance of agglomerations by enhancing productivity; and, ° by changing the places where economic activity occurs.
B.2.1 Supply side effects
High speed rail services are distinct from high speed road investments (namely motorways) in that they facilitate the rapid transit of people and do not directly cater for freight44. From a business perspective they therefore ensure that workers reach their destinations quicker – on both the outward and return legs of a trip. Reducing the time spent travelling and increasing the time spent at destinations increases the productive output of workers for the same investment (in wages). Effectively therefore the business is receiving a unit of output from the worker at a lower average cost to them. This is what economists call the supply side effect. Lower unit costs of production would then imply the business can expand production and maybe move into new (geographic) markets. Thus the supply side impact will lead to growth at the firm level. A caveat to this is that the firm has to be able to sell any additional output it produces. If demand for its output is inelastic (that is relatively fixed) then the productivity gain experienced by the workers could result in a reduction in the workforce – as the business needs fewer workers to produce the
44 High speed rail lines can often free up capacity on existing lines for freight services, but this is not a direct impact of the high speed rail services, which is the focus of this paper. 86
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same level of output. There also exists a debate regarding the productivity of workers whilst travelling by train. Whilst it is accepted that business travellers can work whilst travelling by train, the consensus view is that they engage in low level tasks and do not work for the entire train journey [1,2,3,4]. Train journey time reductions therefore give productivity improvements and provide value to the firm whose workers are travelling by train.
As high speed rail carries passengers rather than freight the types of businesses that are most likely to gain from supply side impacts are those that sell services delivered by people – for example business related services in knowledge-based industries.
B.2.2 New commuting opportunities
High speed rail services can facilitate long distance commuting. This allows people to live in peripheral locations and still access employment in the major metropolitan areas –London, Madrid, Amsterdam or Brussels. Typically such people are high income workers – to be able to afford the high speed rail premium fares – and as such they raise average incomes in the peripheral region in which they live. The other side of the coin is that these long distance commuters strengthen the economic centres in the metropolitan areas to which they commute.
B.2.3 Agglomeration benefits
High speed rail can also increase productivity by allowing more economic activity to concentrate, at high density, in a particular place and by allowing increased specialisation to occur. There is a large body of empirical work that shows that the higher the economic density of a city, the higher its productivity is. A doubling of city size is expected to increase productivity by between 3 and 8% [5]. Whilst high speed rail will not have the same impact on economic density as some urban commuter services might, it will still have an impact. Improved inter-city connections may also facilitate growth in economic productivity by allowing cities to specialise further. With good inter-city links it will not be necessary to source all supplies locally. Furthermore, and as discussed earlier, it will allow firms to sell products further afield. Inter- regional trade increases and the benefits of producing through economies of scale can be realised at all stages in the supply chain. This is the benefit of connecting places [6].
B.2.4 Location of economic activity
Transport has a distinct spatial impact. The places adjacent and connected to the high speed rail stations gain in accessibility, whilst other locations do not. This gives firms in these well connected places a competitive advantage. Other firms may seek to also take advantage of this competitive position and re- locate into the vicinity of a high speed rail station. Of course the firms have a choice as to which ‘end of the line’ they re-locate to. Modern economic theories [7] indicate that if transport costs are high to medium they would locate to the end of the line with the largest market (e.g. London) – as they can minimise overall transport costs that way. However, if transport costs are medium to low – as they are in countries with developed and mature transport networks – then firms will choose to locate at the end of the line where
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wages and land rents are lowest. In countries with developed and mature economies high speed rail lines may therefore facilitate the shift of (mobile) economic activity away from the core and to the periphery.
All these potential changes facilitated rely on the investment decisions of firms and households. These decisions typically rest on a number of criteria. Firms require there to be available a workforce with appropriate skills before they invest. Finance needs to be available and a stable and supportive political environment is also beneficial in order to encourage investment [8]. Not all of these are necessary conditions – though the availability of a workforce is regarded as critical – but the consensus view is that transport improvements (no matter how transformative) require associated economic and political conditions to stimulate economic change.
B.3 International evidence of the economic impact of high speed rail
B.3.1 Scope of evidence
Evidence on the realised economic impacts of transport projects is difficult to obtain and therefore limited in scope. This is for a variety of reasons including: ° Lack of ex post studies. Promoting agencies (e.g. local government or the rail operator) have in the past placed more emphasis on funding ex ante studies on new infrastructure proposals than funding ex post evaluation studies, which means only a limited number of studies exist upon which to draw. ° Difficulty of ex post studies in defining the hypothetical counterfactual of no transport improvement – i.e. what would have happened in the absence of high speed rail. Background economic changes – changes in fares or the price of petrol, periods of economic growth or recessions, changes in the structure of the European Union or regulations of the rail network can all confound with the impact of the intervention. In many cases they can swamp the impact of the project. A further complication is that transport schemes are often planned to link together places with high levels of travel demand now and in the future – and this is certainly the case with high speed rail projects. Such projects may therefore be ‘targeted’ at places where growth is expected to be high – relative to other places. This makes it difficult to make comparative studies with places that have not been directly affected by the transport improvement.
Econometric methods and our understanding of the issues continue to evolve and latter studies are typically more robust than the first ex post studies on high speed rail. Whilst saying all this there does exist a reasonable evidence base upon which we can draw and infer economic impacts – even if we cannot pin point the economic impact with a high degree of granularity.
B.3.2 Business impacts
High speed rail has typically been developed to serve long distance travel between major metropolitan centres. To compete with air the shortest routes between these centres have often been adopted meaning that smaller cities are not necessarily served directly by the high speed trains. Some of the earliest studies on the impact of the Shinkansen and the TGV identified significant business impacts. For the Shinkansen, there is evidence that regions with a station experienced faster population growth, per capita income
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growth and employment growth, particularly in sectors classified as ‘information exchange industries’. Effects were particularly strong for cities with both an expressway and a Shinkansen station [9]. In France the first TGV line was associated with a significant growth in the service sector industries in Lyon [10]. Positive impacts in the service sector are often most pronounced [11] – presumably driven by the fact the high speed rail serves a passenger only market. In France ex post surveys of businesses have identified changes in behaviour following the introduction of the TGV. There is a change in the mobility patterns, with more 1 day trips and some internal re-organisation [3]. Examples of such changes include meetings being in intermediate cities by professionals from the large metropolitan cities at either end of the high speed line– Lille and Zaragoza both have well-appointed meeting rooms within their stations [12]. Large companies are also increasingly locating offices in these intermediate locations and there is some limited evidence that medium sized business and technical consultancy firms carrying out work in the large metropolitan cities at one or other end of the line have relocated to intermediate cities thereby reducing wage and office costs – e.g. at Lille and Cordoba [12].
B.3.3 Tourism impacts
Tourism impacts were also identified in an early French study [10], where it was found that tourist trips increased, but there was a reduction in overnight stays (per tourist trip). Thus some parts of the tourism industry experienced positive impacts, whilst other parts experienced limited or negative impacts. There has also been an increase in urban business tourism through the staging of congresses, scientific meetings, etc.[12]. In Spain 36% of users on the high speed service between Madrid and Toledo are tourists based in Madrid making day return trips [13].
B.3.4 Commuter market
Whilst high speed rail lines have typically been constructed with the purpose of serving end to end journeys between major metropolitan centres, they have also been found to serve a commuter market. Long distance commuting is found to occur up to about 1.5hrs from the main metropolitan area, which in high speed rail terms is about 200km, [12,14]. For example in Spain, Zaragoza on the Madrid-Barcelona line and Cordoba on the Madrid–Sevilla/Malaga line are examples of regional cities from which long distance commuting occurs (to Madrid/Malaga/Sevilla ), whilst slightly shorter distance commuting occurs from Toledo, Segovia and Guadalajara [12,13,15].
B.3.5 Agglomeration impacts
More recent work examining the impact of the Frankfurt-Cologne high speed rail found an increase in economic activity in terms of GDP, GDP/capita and employment. The effect was attributed to market access – which in this ex post context is a mixture of supply side effects (travel time cost reductions) and agglomeration impacts. The impact was most marked on the small towns of Limburg (population 34,000) and Montabaur (population 12,000) which ex post became very close to the major urban centres of Frankfurt and Cologne. These towns (albeit very small towns) experienced an increase in GDP of 2.7% [16].
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B.3.6 Regional commercial development
High speed rail has been positively associated with local development in the vicinity of the stations. The classic examples are Lyon and Lille. Here new stations associated with the high speed line were constructed (Lyon la Parte Dieu and Lille Europe). The adjacent development sites have seen investment and economic activity. In Lyon the new development permitted an expansion in office space which was not available in the city centre – this development has parallels with the way the Canary Wharf development permitted the expansion of the City of London, though at a smaller scale. The Euralille commercial centre is situated between one of the existing stations and the new station. Economic regeneration and development is not however just restricted to these two cases. From a city development perspective high speed rail is seen as a means of transforming city centres. This is because high speed rail can help create an image of a culturally alluring city which attracts and retains entrepreneurs; it can be used in marketing campaigns due to its high quality image; and there is often unused and under-utilised land near railways with relatively uncomplicated land ownership structures (namely the existing railway authority) which can act as a focus for re-development efforts [12].
B.3.7 Summary
International evidence suggests that the very obvious local economic benefits around high speed rail stations have been displaced to an extent. The displacement is not from the main national economic centres, but from the regional hinterlands to the cities [13,14]. The implication is that whilst there is an obvious economic impact in the regional city centres, the net additional impact at the regional and national level is much more limited and can be hard to detect [3,17,18]. To an extent the displacement has been facilitated by the regional rail networks that connect regional hinterlands to the high speed services at the regional centre. Clearly there has been a strengthening of the regional centres in France and this to some extent has prevented further centralisation of economic activity to Paris [3]. In fact it has been argued that the high speed rail networks in France have facilitated some dispersion of economic activity to the regions from the economic core [13,19]- as when faced with low transport costs firms in the periphery have a competitive advantage with the lower wages and land rents that they face.
Not all the cities and towns connected by high speed rail have experienced positive economic impacts, some have hardly experienced any positive impacts. In France, the city centre in Tours, and the vicinities of the stations at Le Creusot and Haute-Picardie have not experienced significant impacts. Two inter- related factors are at play. If there is limited economic activity in the vicinity of the station, then there is insufficient demand for the train operator to serve the station. Without a critical level of economic activity the delays imposed on through travellers outweigh the benefits to the train operator will get from serving the station. A catch 22 situation then develops as without the train services the economic activity needed to make the station attractive for the train operator to serve does not develop. This either suggests that high speed rail will only succeed if it serves centres with a large existing economic mass (e.g. the Londons, Parises and Brussels) or it is supported through preferential planning and institutional support [12]. The successful economic developments linked to high speed rail in an international arena, including Lille and Lyon, all adhere to this template.
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B.4 The UK experience
B.4.1 Existing network
High Speed 1 linking London St Pancras to the European high speed network fully opened in December 2009. Intermediate stations en-route to the tunnel are Stratford International, Ebbsfleet and Ashford. Domestic high speed services also serve other towns and cities in South East England giving significant time savings for trips to/from London from Canterbury, Ramsgate, Folkstone and Dover.
B.4.2 Impacts
B.4.2.1 High market share of HS1
One of the most striking impacts of the UK experience is the increase in day trips both from businesses and commuters and the very high market share that HS1 has for trips to London – despite the premium fare on offer. Trips from Ashford to London have increased by 17%, with HS1 having a 70% market share, and have increased by 40% from Dover, Canterbury and Thanet with HS1 having a 65-70% market share [14].
B.4.2.2 Regional and local development
Development opportunities have been created around the HS1 stations at St Pancras, Stratford, Ebbsfleet and Ashford with mixed success. In Central London the Kings Cross Central development is viewed positively. Studies have already identified uplift in property values in the vicinity of the London rail terminal. House prices in the Borough of Camden are reported to have increased by 13% as a result of the opening of the line [20]. How much of the increase in property prices is due to the high speed rail tunnel and train station development and how much is due to the Kings Cross Central regeneration project are of course debatable. Some regeneration may have occurred anyway with just a re-modelling of Kings Cross station and St Pancras. There exists a similar story at Stratford (which is only served by domestic services). Here again we have a confounding factor with the London 2012 Olympics and associated development having a significant impact on the local economy. We also see property prices increasing throughout the South East region where served by high speed rail services [21]. These latter increases reflect both improved business opportunities as well as commuting opportunities into London.
It is clear that some of this observed development is due to HS1 and HS1 formed part of the London 2012 Olympics bid which has helped stimulate development at Stratford. How much of this development is additional has not definitively been established. There have been claims that HS1 has led to approximately £200 million per annum45 of additional economic development, but this assertion is based on an assumption that 5% of anticipated development is additional [22,23].
45 This would give a present value of £10 billion over 60 years 91
Economic Case: High Speed Rail to Hastings and Bexhill
The performance of the local economies at Ebbsfleet and Ashford is less impressive than at Stratford and in central London. There has been substantial development at Ebbsfleet, but the provision of large car parks surrounding the station has tended to result in the station serving a commuter market into London rather than generating a lot of office based economic development as was originally anticipated. The car parks make the station a less attractive place for businesses to locate. The station at Ashford is also severed from the nearby development sites but this time not by car parks but by the railway infrastructure itself [14]. Like similar stations in France, Ashford and Ebbsfleet do not have a sufficient population to justify the train operators stopping there with a sufficient frequency to make the location attractive for business to locate there. The failure to ensure sufficient complementary developments around the station mean that the critical mass for train service enhancement is not achieved. A Catch 22 situation developed with the result that economic development in these areas is not as extensive as was originally hoped.
Whilst not officially designated a high speed rail line the West Coast Mainline has high operating speeds, and within the UK context its upgrade is worth examining. Its upgrade has been associated with positive economic growth in North West England. However the growth is not uniform across the region. The line appears to have re-enforced sub-regional areas that were already experiencing growth (Halton & Warrington, Cheshire and Greater Manchester South) with little impact elsewhere [13]. This has been attributed to the underlying structural economic conditions in the region and to the relatively poor intra- regional connectivity due to rail capacity constraints in Manchester.
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B.5 Summary • There are a number of key channels via which high speed rail can impact on economic growth including: – Supply side effects – productivity improvements via reducing the time spent travelling and increasing the time spent at destinations increases the productive output of workers for the same investment (in wages). As high speed rail carries passengers rather than freight the types of businesses that are most likely to gain from supply side impacts are those that sell services delivered by people - knowledge based services. – Facilitating long distance commuting from peripheral areas, typically such people are high income workers – to be able to afford the high speed rail premium fares – and as such they raise average incomes in the peripheral region in which they live. – Agglomeration benefits by allowing more economic activity to concentrate, at high density, in a particular place and by allowing increased specialisation to occur which increases productivity. – Spatial impact - places adjacent and connected to the high speed rail stations gain in accessibility, whilst other locations do not, providing a competitive advantage. – All these potential changes facilitated rely on the investment decisions of firms and households. These decisions typically rest on a number of criteria particularly the availability of an appropriate skilled workforce. • The literature review is generally inconclusive in terms of assessments of the impact of high speed rail on settlements. Undoubtedly high speed rail presents an opportunity to stimulate economic growth, particularly at a local level but some of this growth (the evidence is not entirely clear on this matter) will be displaced from regional hinterlands. High speed rail where transport networks are already well developed has the ability to re-distribute some economic activity from the metropolitan cores to regional centres. – The evidence is also clear that commuting in the immediate vicinity of large metropolitan areas, such as London, is an important market for high speed rail operators. Tourism from main metropolitan centres to regional towns/cities can be an important market too - depending on the ‘attractions’ at the destination. – But investment in high speed rail is not guaranteed to deliver economic growth – the evidence is also clear on that. High speed rail development is typically centred on knowledge based service sector businesses. Therefore locations with such an industrial composition are best placed to take advantage of the opportunities presented by high speed rail. – However, a clear finding is that settlements that benefit the most are likely to be those that have supporting policy interventions in place and are oriented towards growth. This is important as Hastings and Bexhill’s regeneration trajectory of the last two decades or so ensures that the foundation has been made through labour market, land market, business support, property market, infrastructure development and marketing initiatives to create the correct blend of intervention and change which will allow high speed rail to stimulate further change and act as a greater catalyst for growth in future. • The evidence also points towards the need for complementary investment in the vicinity of the high speed train station – to create an attractive place to work and do business (e.g. offices, restaurants, hotels and car parking). Local connectivity is also important. This is at two levels. The station needs to be accessible to the development locations – severance from the station by any sort of infrastructure will inhibit development. Additionally there needs to be good intra-regional transport connectivity to ensure that the benefits of the high speed rail line are felt more broadly than in localised regional centres, but also so that businesses located in regional centres can draw on larger markets.
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B.6 References 1. Vickerman, R. (2014) Oral evidence to House of Lords Economic Affairs Committee on HS2. 14th October 2014. 2. Nash, C.A. (2014) Oral evidence to House of Lords Economic Affairs Committee on HS2. 11th November 2014. 3. Quinet, E. (2014) Oral evidence to House of Lords Economic Affairs Committee on HS2. 18th November 2014. 4. Wardman, M.R. et al. (2013) Valuation of travel time savings for business travellers, Report to the Department of Transport. Report dated April 2013. 5. Rosenthal, S. S., & W.C. Strange. (2004). Evidence on the nature and sources of agglomeration economies. In: Henderson, F. & Thisse (Eds.), Handbook of Regional and Urban Economics, vol. 4, pp.2119–2171. Amsterdam: North-Holland. 6. Venables, A.J. (2013) Expanding cities and connecting cities: the wider benefits of better communications. Working paper. Dated 18th June 2013. 7. Krugman, P. (1998). What's new about the new economic geography?. Oxford Review of Economic Policy, 14(2), pp7-17. 8. Banister, D., & Berechman, J. (2000 p318). Transport investment and economic development. London: UCL Press. 9. Nakamura, H., & Ueda, T. (1989). The impacts of the Shinkansen on regional development. In The Fifth World Conference on Transport Research, Yokohama (Vol. 3). 10. Bonnafous, A. (1987). The regional impact of the TGV. Transportation, 14(2), pp127-137. 11. Steer Davies Gleave (2009) International Experience of High Speed rail Supporting Economic Development. Report to Northern Way. Report dated 24 July 2009. 12. Ureña, J. M., Menerault, P., & Garmendia, M. (2009). The high-speed rail challenge for big intermediate cities: A national, regional and local perspective. Cities, 26(5), pp266-279. 13. Chen, C. L., & Hall, P. (2012). The wider spatial-economic impacts of high-speed trains: a comparative case study of Manchester and Lille sub-regions. Journal of Transport Geography, 24, pp89-110. 14. Vickerman, R. (forthcoming) High speed rail and regional development: the case of intermediate stations. Journal of Transport Geography (forthcoming). 15. Garmendia, M., Romero, V., Ureña, J. M. D., Coronado, J. M., & Vickerman, R. (2012). High-speed rail opportunities around metropolitan regions: Madrid and London. Journal of infrastructure systems, 18(4), pp305- 313. 16. Ahlfeldt, G. M., & Feddersen, A. (2010 p49). From periphery to core: economic adjustments to high speed rail. London School of Economics & University of Hamburg. (Unpublished) 17. Graham, G., R. Brage-Ardao & P.C. Melo (2013) Measuring the Impact of High-Speed Rail on Economic Performance: Evidence for the Madrid-Barcelona Corridor. Paper presented at the European Transport Conference, Campus Westend, Frankfurt, Germany 30 September 2013. London: AET 18. Crozet, Y. (2014) Wider Economic Benefits of High Speed Rail: A Critical Approach. Paper presented at hEART 2014 - 3rd Symposium of the European Association for Research in Transportation, University of Leeds, 10th-12th September 2014. 19. Cheng, Y. S., Loo, B. P., & Vickerman, R. (2015). High-speed rail networks, economic integration and regional specialisation in China and Europe. Travel Behaviour and Society, 2(1), pp1-14. 20. Cascetta, E., Pagliara, F., Brancaccio, V. and Preston, J. (2010) Evaluating regeneration impacts of the Channel Tunnel Rail Link. Paper presented at 12th WCTR, July 11-15, Lisbon, Portugal 21. Greengauge21 (2014) High Speed Rail in the South East. Report dated April 2014. 22. Colin Buchanan & Volterra (2009) Economic Impact of High Speed 1. Report to London & Continental Railways. Report dated 2009. 23. National Audit Office (2012) The completion and sale of High Speed 1. Report dated 28 March 2012.
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Appendix C. Consultee list
Table C.1: Consultee List Consultee Organisation Engagement method Economic development and regeneration Graham Burgess Rother District Council Telephone Tim Hickling Rother District Council Email response Norman Kwan Rother District Council Telephone Monica Adams Acton Hastings Borough Council Telephone Kevin Boorman Hastings Borough Council Telephone Simon Hubbard Hastings Borough Council Telephone Anthony Kimber Rye Neighbourhood Plan Telephone John Shaw Seachange Sussex Telephone Business groups Jonathan Dolding Hastings Chamber of Commerce Telephone Liz Gilmore Jerwood Gallery Telephone Neil Cuncliffe Rye Chamber of Commerce Email response Stewart Drew De la Warr Pavilion Telephone Christina Ewebank Alliance of Chambers in East Sussex (ACES) Email response MPs& Council leaders Greg Barker MP – Bexhill and Battle Telephone FE & HE sector Karen Hucker Bexhill College Telephone Nicola Smith University of Brighton in Hastings Telephone Rail groups Richard Madge Bexhill Rail Action Group (BRAG) Telephone Hugh Sharp Bexhill Rail Action Group (BRAG) Telephone Martin Woodfine SHRIMP - St Leonards and Hastings Rail Email response Improvement Programme Stuart Hartland Marshlink Action Group (MLAG) Telephone Sam Bryant Sussex Community Rail Partnership Telephone Ray Chapman East Sussex Rail Alliance Email response Commercial property sector Christopher Broome Cluttons Telephone Richard Harding Bray Fox Smith Telephone Nick Keeley Barratts Homes Email response Andrew Russell Land Securities Telephone Chris Allen Maltbys Telephone
Businesses responding via chamber of commerce (anonymous): Business 1 Email response Business 2 Email response Business 3 Email response
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Consultee Organisation Engagement method Business 4 Email response Business 5 Email response Business 6 Email response Business 7 Email response Business 8 Email response
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