Moorland & City Railway Heritage Railway Extension Into Leek Summary Report September 2013

Moorland & City Railway Heritage Railway Extension into Leek September 2013 Moorland & City

Railway

Heritage Railway Extension into Leek

Summary Report

September 2013

Moorland & City Railway Heritage Railway Extension into Leek September 2013

TABLE OF CONTENTS

Page Numbers

Section 1 Introduction 1

Section 2 The Project 2

Section 3 Market Summary 7

Section 4 Summary Economic Assessment 15

Section 5 Conclusions 23

Moorland & City Railway Heritage Railway Extension into Leek September 2013

1 Introduction

Background

1.1 This Summary Report has been prepared by the Leisure Consultancy in association with Mott MacDonald and reviews the strategic context and market potential that could be optimised by the heritage rail development planned by Moorland and City Railway (MCR). It also encompasses the views of key consultees including representatives of: Churnet Valley Railway; Staffordshire Moorlands District Council; Visit High Peak and Derbyshire DMO; and Team Tourism. The Summary Report concludes with the likely economic benefits that could be derived from the development proposals.

1.2 In this section of the report, we firstly comment on the development proposals before outlining the report structure.

Proposed Development

1.3 MCR was established to “purchase, renovate and return commercial freight to the Stoke on Trent – Cauldon Low rail route”. Linked to these key objectives are MCR’s tourist related plans which are to: provide direct access to Alton Towers; to re-connect Leek to the national rail network (the focus of this report) ; and to support the extension of the Churnet Valley Railway (CVR), one of the most popular heritage railways presently operating in the Midlands.

1.4 The CVR has already benefited from the plans of MCR utilising the extended valley route linking Cheddleton, Consall and Frogall to take in the Cauldon branch (which has been brought back into use by MCR), with the overall trip now extending to a round trip of 26 miles.

1.5 As we understand it, MCR’s intention is to secure the planned rail development/extension through cross funding with a residential development at Leebrook for which planning consent is to be sought. This Summary Report will form part of the supporting material for a planning application, presently being assembled by Capita.

Format of the Summary Report

1.6 Cognisant of the foregoing our Summary Report is set out as follows:

Section 2 The Project

Section 3 Market Summary

Section 4 Summary Economic Assessment

Section 5 Conclusions

Moorland & City Railway Heritage Railway Extension into Leek July 2013

2 The Project

Introduction

2.1 In this section of our Summary Report we provide the rationale underpinning the development proposals and comment on the proposed facilities. We also review the strategic location of the site and consider relevant strategies and policies which provide the context to the development proposals.

The Proposals and Rationale for Development

2.2 The proposals comprise three elements namely:

Extension of the railway which would be approximately ¾ mile

A new, purpose built station in Leek which would be located in an accessible and prominent position in Leek

A residential development on surplus railway land at Leebrook

2.3 As noted earlier, this latter element is fundamental to providing the new railway infrastructure as it will cross fund the railway proposals. Importantly, the new sub-section would “connect” Leek to the MCR/CVR network bringing with it a number of important benefits which can be summarised as follows:

Provide a new terminus for CVR heritage steam services

Provide a new terminus for MCR commercial services to Stoke, Alton Towers, The Churnet Valley and the Cauldon line

Act as a catalyst to stimulate regeneration in the area, most particularly in respect of the Cornhill development which, as noted in the Draft Churnet Valley Masterplan (DCVM) “has been a focus for the Council for a number of years”. As highlighted in the DCVM, this area has the potential to create employment and leisure development, noting the assets of the railway and canal – land availability combined with the MCR/CVR railway development plans are supportive in this respect

2.4 The overall rationale underpinning the development proposals therefore is to develop the heritage railway which will be a more significant “attractor” in the area, potentially widening its catchment which in turn will add to the visitor economy, creating jobs and spend. The proposals will also have a material impact on Leek, connecting it to the other tourist “honeypots” with the added benefit of extending visitor dwell times. The proposals also have a commercial rationale linking services to Stoke and other areas as well as “kick-starting” regeneration activity in the Cornhill area.

Moorland & City Railway Heritage Railway Extension into Leek September 2013

Location & Linkages

2.5 The following map illustrates the route of the railway and highlights its strategic location in relation to other settlements in the area. It also shows the central position of Leek in respect of the Council area and illustrates the connectivity that could be achieved through the development proposals.

Development Site

2.6 The proposed railway extension into Leek would follow the line of the disused railway track. It has potential to act as a catalyst to development around the new station that would be built (as noted earlier). The station would be located on vacant land that was previously used for employment uses

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and, as part of the Cornhill/Barnfields proposals forms part of a wider Masterplan for mixed-use development extending westwards towards the canal and the River Churnet.

2.7 Images of the site for the new Leek Station are shown below.

Site for proposed Barnfield development, the station would be located on the other side of the site, the trees mark the line of the railway

Vehicular access to the site and station would be formed from the existing turning circle

Strategies and Policies of Relevance

2.8 Having commented on the rationale for the development proposals, the development site and its strategic location, in this section we briefly comment on a number of strategies and policies which also provide the context for the proposed rail development. These include the following:

Visit England – A Strategic Framework for Tourism 2010-2020 Visit England – Wise Growth Action Plan 2010-2020 Visit Peak District and Derbyshire – Tourism Strategic Framework 2011-2014 Staffordshire Moorlands Tourism Study – 2011 Churnet Valley Accessibility and Connectivity Study - 2011 Draft Churnet Valley Masterplan (Staffordshire Moorlands Local Development Framework – July 2013

Moorland & City Railway Heritage Railway Extension into Leek September 2013

2.9 In the following table we briefly comment on each of these strategies.

Strategy Context Visit England – A The Framework notes that tourism is worth £97bn a year to the economy and, Strategic Framework for although operating below capacity, suggests that the potential for growth is Tourism 2010-2020 significant. The Vision identified in the Strategy is “to maximise tourism’s (revised edition 2011) contribution to the economy, employment and quality of life in England” and this is underpinned by 4 objectives and a number of action plans, one of which is Wise Growth – noted below. The economic value of tourism is clearly stated and this has particular resonance with MCR’s proposals to facilitate extension of the heritage rail provision in Staffordshire Visit England – A Acknowledging the economic role of tourism, this Action Plan notes the need to Strategic Framework for balance growth to provide sustainability ensuring that a co-ordinated approach is Tourism 2010-2020 taken to tourism development thereby achieving the best outcomes, economically, (revised edition 2011 – socially and environmentally. Viability is one of the underlying principles providing Wise Growth Action Plan jobs for local people and optimising visitor spend in the local community. MCR’s proposals would contribute to the local community in terms of jobs and spend whilst also benefiting the area from an environmental perspective, providing an alternative to car borne access and linking attractions together Visit Peak District and The Framework argues that there is a need to remain competitive in terms of cost Derbyshire – Tourism and value for money, whilst offering visitors a great experience. Future Strategic Framework development in the area should focus on growing the arts, culture and heritage 2011-2014 markets, and continued product development is required to keep people visiting. In terms of sectors, the MCR proposals will contribute to developing the heritage offer in the area in order to attract new visitors and retain existing ones Staffordshire Moorlands The underlying aim of the study was to review the role and impact of the visitor Tourism Study - 2011 economy and consider opportunities for economic growth both in the Churnet Valley and wider district. Part of the report looked at Product Development within which a number of “Transformational projects” were identified, one of which related to development of the Churnet Valley and Moorland and City Railways. The report noted the likely stages of rail development to: Stoke; Alton Towers, Leek and Waterhouses and the positive impact on visitor numbers that these planned developments could make. Growth in visitor numbers, creating physical and thematic linkages (e.g. Leek and Alton Towers) were noted as positively contributing to the visitor economy Churnet Valley Developed as part of the Churnet Valley Masterplan and to inform the Local Accessibility and Development Framework, the study reviewed the potential for improving Connectivity Study - 2011 accessibility in the area, promoting sustainable forms of transport and identified future opportunities to improve links between attractions and “settlements”. The report noted the good connection provided by the CVR (when operating) linking the villages of Cheddleton, Consall and Frogall. Although, a number of key issues were noted relating to all modes of travel, the potential to improve accessibility

Moorland & City Railway Heritage Railway Extension into Leek September 2013

was also highlighted with the Heritage Railway – future expansion identified as having “good potential”. The report noted that the CVR was not only a “major attraction for the area” but also that it provided a key transport link to facilitate visitors exploring more of the Churnet Valley. Commenting on planned development by MCR the report notes that the “ability to introduce passenger services from Stoke into the Churnet Valley would be highly beneficial in developing the area as a sustainable tourism corridor” Draft Churnet Valley Following extensive consultation, the Council has considered a number of options Masterplan (Staffordshire to progress the Masterplan, with the officer recommendation to “approve the Draft Moorlands Local Churnet Valley Masterplan for statutory public consultation and support Development Framework designation of the Churnet Valley as An Area of Outstanding Natural Beauty”. – July 2013) Some changes have been made to the Draft Masterplan, however, in relation to this project, the following comments contained with Section 8.4 Sustainable Transport are relevant: “there shall be continued support for the use of the Churnet Valley rail line as a heritage and tourist attraction and support for the re-opening of the rail line into Stoke-on-Trent and into Leek and the line to Cauldon Lowe for both light passenger and freight use”. Although a cautionary note was made in relation to the Alton Towers proposed link suggesting that further evidence would be required in terms of feasibility and viability. Within the Draft Masterplan the importance of the planned rail developments are noted and there is recognition of the value of CVR as both an attraction in its own right but also as a means of moving people and linking attractions.

Comment

2.10 Within this section of our Summary Report we have reviewed the development proposals and rationale and considered the strategic location of Leek within Staffordshire Moorlands and its relationship to the CVR.

2.11 We have also considered the strategic context in relation to tourism and highlighted the “fit” of the MCR proposals to the development of the visitor economy both in the Churnet Valley and wider district; acting both as an “attractor” and also in contributing to the strengthening of links between attractions.

Moorland & City Railway Heritage Railway Extension into Leek September 2013

3 Market Summary

Introduction

3.1 Within this section of our Summary Report we briefly comment on UK/national trends of relevance including: the leisure market; the tourism market; the visitor attractions market; historic and cultural attractions; day visits; and, food and beverage. We also comment on Heritage Railways before turning to the more local tourism markets in Staffordshire, Staffordshire Moorlands and Leek and concluding with key points elicited from the consultation exercise.

Market Trends of Relevance

3.2 Leisure Market – The value of the UK leisure industry in 2011 (most recent data) is estimated by Mintel to be a little over £66bn. This represents a fall of 3.2% since 2006 and a significant decline from the £70bn achieved in 2007, pre-recession. In fact, in real terms, with the effects of inflation removed, the decline in the value of the market between 2006 and 2011 is significantly more, i.e. 22%.

3.3 Although the statistics would suggest that a levelling out is now being experienced, to some extent this is probably attributable more to the 2.5% increase in VAT combined with the high rates of inflation which has been passed on from leisure businesses to the customer by way of price increases. Without these factors, it appears more than likely that the value of the industry would have decreased.

3.4 In terms of the future, Mintel forecasts suggest that the value of the UK leisure industry will experience a further small decline by 0.4% between 2011 and 2016, with its value being estimated at £65.8bn.

3.5 Tourism Market – National - The tourism industry is one of the largest industries in the UK, contributing an estimated £115.4bn to the economy in 2009 (taking into consideration both direct and indirect impacts), equating to 8.9% of UK Gross Domestic Product. The number of jobs supported by the industry is forecast to increase by 250k between 2010 and 2020, from 2.645m to 2.899m. Indeed, one in twelve jobs in the UK is presently being directly or indirectly supported through tourism. In the next decade, the visitor economy is forecast to be one of the best performing sectors, with above average growth at 3.5 per cent in Gross Value Added terms, outperforming other key sectors in the economy (source: VisitBritain Visitor Economy Facts – Updated July 2012)

3.6 Tourism expenditure is forecast to rise at an annual real growth rate of 3% between 2010-2020 with spending by inbound visitors higher than domestic residents, – 4.4% compared with 2.6%. ( source: Deloitte).

3.7 The key findings for Visitor Attractions (June 2012) reported an improved position in terms of visitor numbers in the first half of 2012 compared with the same period in 2011, although this was not “across the board” with outdoor attractions not faring as well as indoor attractions, principally because of the weather. Of those attractions that were outdoors, visitor numbers were noted as follows: 64% down; 23% up; with 13% the same. In contrast with this mixed outdoor & indoor

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attractions reported a slightly better position with: 52% down; 40% up; and 8% the same. Interestingly, operators of outdoor attractions were optimistic about the summer, reflecting the fact that the weather might improve and that there would be growth from overseas visitors.

3.8 Additional findings from the same report also indicate that: the popularity of free attractions has increased, reflecting the economic position; visitor numbers in the May-June (2012) period have declined by 2% on average; and that attractions in rural locations have performed less well than those in cities/towns and seaside locations.

3.9 Historic and cultural attractions within the UK had an estimated 121 million visitors in 2010 (source: Mintel 2010), which reflects an increase of 15% over 2005 numbers. Museums and galleries dominate the total visits to heritage and cultural attractions, accounting for 60% of the total, with historic properties accounting for the balance. Approximately two thirds of adults have been to an historic or cultural attraction of some type during the past year, although museums remain the most popular (source: Mintel ).

3.10 In respect of Heritage Tourism which includes industrial, maritime and transport heritage, this sector is valued at £12.4bn a year supporting 195,000 jobs ( source: Investing in Success: Heritage and the UK Tourism Economy (2010); Heritage Lottery Fund; VisitBritain).

3.11 Turning to GB Day Visits 2011 data (encompassing data from England, Scotland and Wales), key findings included: GB residents took a total of 1,545 million Tourism Day Visits of which 1,307 million were taken to destinations in England; visitor spend was £52bn, £43bn of which was attributed to visits in England; market seasonality was evident with (unsurprisingly) the highest number of trips taking place between July and September (30%); going to visitor attractions ranked 8 th (out of 15) of GB visits by activities undertaken represented by 108m visits undertaken during a visit and 77m where visiting the attraction was the main activity; and visitor spend to attractions in England represented 6% of overall spend.

3.12 Looking at the volume of day visits in GB April-June 2013, and comparing them to the same period in 2012, a 14% decline was recorded. The value of these visits however, remained relatively stable at £13.6bn, a small increase of 1% over the same period the previous year. Reviewing the year to date situation, the volume pattern is the same with expenditure falling by 5% overall, probably due to the falls experienced in the early part of the year because of the poor weather. In terms of England, the picture is slightly different with volume declining by 16% (April-June 2013) in contrast with the same period in 2012, although the value increased by 7%. Looking at the year to date figures, these broadly mirror those of GB with an overall decline in value of 4% being recorded. ( source: VisitEngland - GB Day Visits 2013 April-June, GB & England).

3.13 The Food and Beverage market is also of relevance to the planned development. Recent research (Allegra Market Research) has identified the value of the UK eating out market as £42 billion (July 2011). Their research highlighted how consumers are eating out more often in 2011 compared with 2010 (on average one in nine meals are consumed away from home in 2011 compared with one in ten in 2010), however reduced disposable income has influenced the choice of where to eat out, with an emphasis on value for money.

Moorland & City Railway Heritage Railway Extension into Leek September 2013

3.14 Other key factors to note from the survey included:

Consumers are more health conscious than in previous years with 92% of people stating a preference for healthier choices Local and regional sourcing is important, with over half of consumers preferring to eat at establishments with locally sourced ingredients Coffee shops (potentially applicable to the railway) have the highest frequency of visit with 23% of consumers making one meal purchase per week

3.15 Overall, we would comment that although the markets of relevance (summarised in the preceding paragraphs) have been negatively impacted by the economic decline, there are signs of recovery. Most particularly, growth in the: tourism market; the visitor attractions market; and in hospitality are forecast which will be important in achieving the sustainability of the proposed rail extension, adding to the local visitor economy.

Heritage Railways

3.16 Much of the heritage railway sector development has focussed on reinstating railway routes and lines that were removed in the 1960s. The characteristics of heritage railways do vary reflecting their locations, nature and scale of their visitor markets, their heritage and associated offer. In this section of our Summary Report we provide an overview of the characteristics and visitor numbers at a sample of other heritage railways in the UK.

3.17 Heritage railway preservation has developed into a growing industry with the railways often providing differentiation in terms of the tourism programmes in many areas including for example Gwynedd (Welsh Highland Railway) and the North Yorkshire Moors National Park (North Yorkshire Moors Railway).

3.18 By way of background to the industry, there are 108 operating heritage railways, tramways and rail cableways throughout the UK that, in total, attract between 5.3- 7.8 million visitors a year (source: Heritage Railways) . In 2011, these operations carried 7.1 million passengers generating approximately £92 million to local economies through train journeys, catering, shops and workshops (source: Heritage Railway Association) . In terms of visitor profile, these were typically family groups (65%) or couples (27%).

Churnet Valley Railway (CVR)

3.19 Turning now to the Churnet Valley Railway, the CVR route presently extends to a round trip of 26 miles placing it at the top end for length of route in the country. This provides a good base on which to build a new station, and supporting infrastructure in Leek which in our view would create impetus for further demand. In essence, Leek would become the operational hub for CVR-MCR and, simultaneously, provide a basis for further tourism development in Leek.

3.20 In terms of background to the CVR - it was opened in 1849 as part of a secondary main line linking Macclesfield with Uttoxeter via Leek. Having closed in the 1960s, it was opened as a heritage railway

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line in 1996 which attracted approximately 7,000 visitors. In 1999, Consall Station was re-opened and within a year visitor numbers increased to 25,000. Following this, in 2003, Froghall station was reconstructed.

3.21 In 2011, the Heritage Railway received approximately 70,000 visitors a year. The railway holds many events, such as children’s festival and Christmas events - at Christmas for example, CVR expects 1,000 visitors a day spread over the three stations. The majority of these visitors are local residents from Staffordshire with numbers peaking in school holidays, Christmas, Easter and summer.

3.22 The CVR currently employs 6 full-time staff, 6 seasonal staff and approximately 180 volunteers. The extension into Leek would require an additional 3 full-time staff.

3.23 Extending the line to Leek, Stoke-on-Trent and Alton Towers is expected to greatly enhance access, connect tourism ‘zones’, increase visitor numbers on the heritage railway and therefore spur tourism development in towns such as Leek. These potential benefits could be enhanced by other private and public projects including developing visitor attractions and improving the accommodation stock.

3.24 In terms of CVR’s current market position, it is useful to review other comparable railways, most of which are situated in visitor destinations. The information which is tabulated below has been provided by MCR and provides insight into the scale and operation of various heritage/steam railways around the country.

Railway Length (miles) Main Line Connection Visitors Resident Locos Bluebell 9 Yes 175,000 30 East Lancashire 12 Yes 144,000 4 Glos/Warwicks 10 No 70,000 11 Great Central 8 No 150,000 10 Keighley & North Valley 4.75 Yes 100,000 30 Llangollen 7.5 No 100,000 14 Mid Hants 10 Yes 150,000 16 Midland Rail Centre 3.5 No 130,000 22 Nene Valley 7.5 No 63,000 17 North Norfolk 5.5 Yes 130,000 6 Nth.Yorks Moors 18 Yes 335,000 12 Paignton/Dartmouth 7 Yes 350,000 6 Severn Valley 16 Yes 200,000 27 Swanage 6 No 250,000 5 West Somerset 20 No 200,000 9 Embsay & Bolton Abbey 4.5 No 107,000 19 Kent & East Sussex 10.5 No 100,000 12

3.25 The data provided in the table present a snapshot of railways which display some different characteristics in terms of their locations, operation and rationale for their existence with the

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common feature being their contribution to the visitor economy. The railway operations highlighted include: those located in major tourism destinations such as the North Yorks Moors, Paignton- Dartmouth, Swanage and West Somerset; some that have been established on the back of railway preservation activities such as Bluebell, Great Central and Severn Valley; and those close to major conurbations such as East Lancashire. Notwithstanding this, there are a number of railways that demonstrate similar characteristics to an extended CVR in terms of locational attributes and visitor numbers achieved including: Keighley and Worth Valley (100k visitors); Llangollen (100k visitors); Kent & East Sussex (100k visitors); and Embsay & Bolton Abbey (107k visitors) which very much support the proposals to connect to Leek in the short term and the impact in respect of visitor numbers, and indeed the longer-term aspirations for CVR to re-establish links to Stoke-on-Trent and provide a main line connection, complemented by CVR’s potential link to Alton Towers in the future. This would therefore provide a platform for further growth over and above what the extension to Leek (the subject of this report) will deliver.

3.26 This provides good supporting evidence of the potential impact that the railway extension to Leek could generate in terms of increasing visitor numbers (and, in consequence, spend). In particular, analysis of the most comparable railways would suggest that a new terminus at Leek would lead to an increase in CVR visitor numbers in the order of 95,000 to around 100,000 i.e. an increase of between 36-43%.

County Tourism

3.27 Staffordshire, like much of the surrounding area, has always been distinguished by its manufacturing base. More recently however, its economy has diversified optimising the opportunities presented by many of the characteristics of the area (e.g. hills & fells, parks & gardens, ceramics, canals and heritage/heritage railways). Unsurprisingly therefore, a key objective of Staffordshire County Council is to grow the Staffordshire tourism economy, increasing both visitor trips and spend (as noted in the following table), attracting more staying visitors (currently, 94% of all visitors are day visitors) and also penetrating the overseas market (dominated at present by the domestic market).

Indicator Aim

Number of visitors trips: A 7.1% increase from 20,134,000 (2010) to 21,727,171 (2014)

Average spend per visitor: A 13.6% increase from £48.85 (2010) to £55.5 (2014)

Contribution of leisure tourism to A 15.4% increase from £1,037 million (2011) to £1,197 million Staffordshire’s economy: (2014)

Number of jobs supported: Increase of 10% between 2010 and 2014

Source: Staffordshire County Council

Moorland & City Railway Heritage Railway Extension into Leek September 2013

Local Tourism

3.28 Turning to the more local areas, the district of Staffordshire Moorlands has a population of approximately 95,400, of which 53% are based in the three main towns; Leek, Biddulph and Cheadle (source: Revised Submission Core Strategy, 2011) .

3.29 The visitor economy in the district supports approximately 10% of total employment, contributing £158 million to its economy in 2009. A high proportion of total visitors to Staffordshire Moorlands are attracted to the location because of its diversity encompassing for example heritage, culture and outdoor activities. Most visitors visit the area just for the day (in common with the county) and have travelled from within Staffordshire (two thirds), often to the same location (80%) (source: Staffordshire Moorlands Tourism Study, 2011) .

3.30 More recent data about tourism in Staffordshire Moorlands (Scarborough Tourism Economic Activity Monitor - STEAM: Visit High Peak & Derbyshire/ Global Tourism Solutions ) reflects the wider UK tourism performance noted earlier in this section with visitor numbers and spend showing a decline from 2011 to 2012. In relation to visitor numbers, these have declined by 5% (5,107k to 4,843k) with tourist days showing a slightly smaller decline (4%). Given this, both tourist expenditure (direct and indirect) and economic impact have also declined, both falling by 4%.

3.31 A key tourism ‘zone’ is Alton Towers. The Park receives 2.5 million visitors a year, of which only 18% are from Staffordshire. These visitors contribute £38 million to the local economy (source: Alton Towers Resort Long-term Plan) although most of this value is retained within the site.

3.32 Linkages between tourism ‘zones’ in Staffordshire Moorlands is weak which is partly due to poor transport connections within the district – the proposed heritage railway extension planned could, in part, address this situation. The Staffordshire Moorlands Core Strategy (2011) suggests that there is modest growth potential for the district’s current markets. In terms of visitor numbers, the report estimates increases up to 50,000 per annum in key locations.

3.33 Leek is of particular relevance to proposals and it is therefore helpful to consider some key characteristics of the area. The town is situated in the north east of Staffordshire close to the south west boundary of the Peak District National Park. As a traditional market town boasting a large number of listed buildings and an industrial heritage, Leek plays a key role in the visitor economy of the district, predominantly attracting day visitors (mostly from Staffordshire – 58%) who are drawn to the town for sightseeing experiences (38% of total visitors), including heritage and natural history. The planned opening of a new budget hotel in Leek (Premier Inn) may well help to attract more staying visitors.

3.34 Leek is considered to have long term tourism potential; however reaching this is unlikely to be a rapid process and could take up to 10 years. Potential projects that may help tourism develop within Leek include: supporting and improving retail and catering, increasing accommodation stock (see previous comment) and development of the Cornhill site (source: Staffordshire Moorlands Tourism Study) .

Moorland & City Railway Heritage Railway Extension into Leek September 2013

Consultation

3.35 A focused consultation exercise was conducted as part of the study. This embraced representatives from: the Churnet Valley Railway (CVR); Staffordshire Moorland District Council; Visit High Peak and Derbyshire DMO; and Team Tourism. Key points raised are summarised below.

Significant growth of CVR in recent years with events making a major contribution The Christmas period has traded successfully as illustrated by the fact that over 10,000 visitors were attracted over a 10 day period Although families are an important sector, the dining experiences (fully booked for the year) help to attract different audiences Extension of the track to Cauldon resulted in a significant increase in visitor numbers (and dwell time/spend) and a similar positive impact is anticipated in relation to the planned development to Leek Familiarisation trips presently organised with event promoters such as coach operators and the opportunity for joint marketing initiatives with other attractions is to be further explored Updated Churnet Valley Masterplan – still a major focus on the visitor economy with CVR continuing to play an important role Supportive of MCR plans for development to Leek & Stoke but more evidence required to underpin proposals to extend to Alton Towers (e.g. how it might be delivered, the viability of proposals, engagement with operator) Importance of Visitor Economy to Staffordshire Moorland area Need for continued investment in visitor infrastructure – plans for heritage rail extension therefore welcomed Rail extension and development of CVR considered to be a “Transformational” project, capable of significantly extending visitor numbers over the period of the total development

Comment

3.36 Within this section we have considered trends in the key markets of relevance, noting the importance and value of tourism to the economy – also evidenced through the consultation. The picture is mixed however with the UK leisure industry being adversely affected by the wider economic decline but this contrasts with the growth in sectors such as: visitor attractions; and historic and cultural attractions in terms of visitor numbers. The picture for the food and beverage market is also positive with data indicating that there is a greater propensity to eat out although “value for money” remains an important consideration.

3.37 We have reviewed the heritage railway/steam sector commenting on the operation of a number of heritage/steam railways noting their locational characteristics and impact on the visitor economy in terms of the numbers attracted, and highlighting the achievability of the CVR numbers (driven by the proposed rail extension to Leek) noted in the following section, when compared with similar operations. Linking this with the forecast market growth in a number of relevant markets therefore augers well for the future.

Moorland & City Railway Heritage Railway Extension into Leek September 2013

3.38 Finally, we have reviewed the tourism performance in the county and more locally, again recognising the value of this sector to the economy, albeit noting the pressure on this market from the wider economic decline.

Moorland & City Railway Heritage Railway Extension into Leek September 2013

4 Summary Economic Appraisal

Introduction

4.1 This section contains a summary economic appraisal of the proposed heritage railway extension which would facilitate tourism and leisure uses and will have a wider economic impact on the local economy of Staffordshire Moorlands and Staffordshire. The following analysis presents an overview of what this may consist of in terms of expenditure, jobs and Gross Value Added (GVA).

4.2 The analysis is based on an assessment of a series of employment and expenditure effects, as follows:

Temporary construction effects Direct effects Indirect effects through additional spend generated in the supply chain Induced effects caused through the disposable income multiplier Visitor effects

4.3 As appropriate, the analysis presented below provides both the estimated gross and net effects of the railway extension. Gross effects are the expected observable changes in impact on the local economy (for example an expected 3 extra employees will be hired). Estimated net effects remove impacts that may have happened without the railway (deadweight), what has been shifted to the railway (displacement), and the impacts that that do not benefit the local area (leakage). For Economic Appraisal purposes the net effects are most valuable to consider as these effects adhere to HM Treasury Guidance.

Temporary Construction Effects

4.4 Total construction costs for the proposed extension of the railway and new Leek station will amount to approximately £1.2 million (based on discussions with the railway operator). This expenditure will create temporary construction work during the development and construction period.

4.5 As the exact specification for the construction is not yet detailed, we have assumed that £80,000 of construction expenditure is required to support one person year of employment. This assumption is informed by recent economic impact studies we have conducted. The following table therefore sets out our calculations of the temporary construction employment effects.

Capital Job:Capital Ratio Person FTE Supply Jobs Supported in Cost (£) Years Jobs Multiplier supply chain 1,200,000 1: £80,000 15.00 1.50 0.4 0.60

4.6 Using HM Treasury guidance to convert person years of employment into Full Time Equivalent (FTE) jobs; a FTE job will be for 35 to 40 hours per week and is anticipated as being available for at least 10 years. The construction period could, therefore, result in 1.50 FTE jobs being temporarily created

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with a further 0.60 supported in the construction industry supply chain. Combined, the construction phase would support an estimated 2.10 FTE jobs.

Direct Effects

4.7 Once the line extension is fully operational, 3 extra FTE jobs are expected to be created by the MCR/CVR to support the additional activity and day visitors. We understand from discussions with the client that these jobs would have a combined additional salary of £40,000 per year.

4.8 It is likely that there will be a degree of displacement in relation to the new development. In essence, displacement occurs when a development takes some market share or skilled labour from other existing local businesses and organisations. Therefore, while the proposals will enhance the tourism and leisure sector in the area, this will not be completely additional and some displacement will occur from other businesses. As such, the 3 FTE jobs represent a gross figure. It is impossible to accurately foresee the exact scale of this displacement or the existing businesses that will be affected. Nevertheless, we can draw on existing guidance to assist in this respect such as the English and Scottish guidance on Additionality. As the economic impact assessment is focusing at the local level, and given the limited amount of directly comparable employment opportunities in the area, we consider that displacement would be fairly low, at 33%, as shown in the following table. Consequently, the direct operation of the site will potentially result in a net additional gain of 2 FTE jobs when the new line extension is opened, which will create income multiplier and GVA benefits as shown in the following table.

Direct Impacts Numbers FTE Jobs (Gross) 3 Total Additional Salary p.a. £40,000 Allowance for Displacement & -33% Deadweight FTE Jobs (Net) 2 Additional Net Salary effects £26,667 Income Multiplier Effects 8,000

4.9 The direct FTE jobs supported will contribute an estimated £38,000 in Net Gross Value Added to the local economy.

Gross GVA Numbers GVA per job 19,000 GVA £ (direct) 57,000

Additionality – Net GVA Numbers GVA per job 19,000 GVA £ (direct) 38,000

Moorland & City Railway Heritage Railway Extension into Leek September 2013

Indirect Effects

4.10 Indirect effects are supported by the operation of the railway and the additional demand for goods and services that this generates in the local economy. The injection of this money into the local economy will result in successive rounds of spending known as the supply chain multiplier. Operational expenditure for the railway is estimated to increase by £100,000 per annum; based on existing levels of non-salary operational expenditure and increased levels associated with higher volumes of visitors. At present the railway incurs expenditure of about £667,000 per annum; £450,000 of this is cost of sales (with gate direct costs accounting for £361,000 of this incurred for costs of coal, diesel and engine hire); and, £217,000 is administration expenses (with salary and on- costs costs accounting for £100,000 of this). Salary costs are included in our induced analysis (below); for the indirect analysis we have suggested that the current £567,000 non-salary operational expenditure would increase by approximately £100,000, predominantly through increased gate direct costs as more locomotives are hired and operated.

Indirect (Supply Chain) Impacts Numbers Expenditure within Supply Chain 100,000 Supply Linkage Multiplier 0.4 Supply Linkage Multiplier Effects 40,000

4.11 It is impossible to know the full extent of supply chain multiplier effects, but previous research and experience suggests that a multiplier value of about 0.4 is reasonable in this type of situation. This means that every £1 of expenditure supports a further £0.40 of spending in the supply chain. Consequently, the £100,000 of operational expenditure in the local/regional supply chain results in a further £40,000 of subsequent spending in the supply chain. This may be sufficient to support a further 1 FTE job on the basis that an estimated £40,000 of expenditure in the economy is required to support an additional FTE job.

Induced Effects

4.12 The induced effects generate further rounds of spending in the local economy as those who are employed at the site spend their disposable income in the area. Again, it is impossible to know the full extent of this disposable income multiplier effect, but research and experience suggests an income multiplier of about 0.3 is reasonable for this type of proposal (source: Scottish Enterprise, Additionality & Economic Impact Assessment Guidance Note. Tourism Income Multiplier (Hotels, catering & pubs etc.).

4.13 In this analysis, we have reduced the salary expenditure to broadly reflect the allowance for displacement as set out above. Therefore, the net additional salary expenditure is estimated at 66.67% of the gross total.

Moorland & City Railway Heritage Railway Extension into Leek September 2013

4.14 So, where the gross payroll figure is £40,000, the net figure at 66.67% equates to £26,667. The disposable income multiplier is set at 0.3 so that every £1 of disposable income spent by employees results in a further £0.30 of spending in the local and regional economy after leakage to international and national levels occurs (i.e. mortgages, insurances, taxes etc). The multiplier effect results in a further £8,000 of spending which in itself could support a further 0.2 FTE jobs. This would contribute an estimated £3,800 in Net GVA.

Gross Effects Numbers Gross Income Multiplier Effect 12,000 Expenditure per FTE Job p.a. 40,000 Gross Induced FTE Job p.a. 0. 30

Net Additionality – GVA Numbers Net Income Multiplier Effect 8,000 Expenditure per FTE Job p.a. 40,000 Net Induced FTE Job p.a. 0.20

Additionality - GVA Numbers Net GVA £ ( Induced ) 3,800

Visitor Effects

4.15 Visitors to Leek would have an economic impact that is generated through the money they spend during their visit, although this would also include upfront costs (like insurance), transport and travel costs incurred in getting to the area. To assess the economic impact of visitors we have estimated the number of visitors to the local economy and applied an average spend per head per day. An estimate of £25 average spend per day per additional visitor has been derived from comparing STEAM (Scarborough Tourism Economic Activity Monitor) data that estimates average spend in 2012 for day visitors to Staffordshire Moorlands was £32.70 (though this will include the Alton Towers resort), along with discussions with railway operators that indicate typically customers would spend less than this.

4.16 Forecasting future additional visitors based on the rail extension is difficult and as the data in Section 3 demonstrates, trends for individual heritage railways are difficult to predict. Consequently, we have estimated the effects of three scenarios based on the preceding analysis of the heritage rail sector and discussions with the client about potential increases in volume of visitors following completion of the extension. The three scenarios take a five-year horizon for delivering realistic levels of growth, as follows:

Scenario 1 assumes an additional 20,000 passengers per annum Scenario 2 assumes an additional 25,000 passengers per annum Scenario 3 assumes an additional 30,000 passengers per annum

Moorland & City Railway Heritage Railway Extension into Leek September 2013

4.17 We also anticipate that of the existing 70,000 users of the heritage railway, adding the option of visiting Leek would encourage an increase in spending from an average of £20 per head to an increased average per head of £25 (for about half of existing visitors (35,000), due to the opportunity for extended time in the area generating more opportunity for local businesses to capture visitor spending. We estimate that approximately half the current users would be encouraged to visit Leek, resulting in an additional £175,000 for the local economy from the additional spend of these visitors.

Induced (Visitor Spend) Impacts Scenario 1 Scenario 2 Scenario 3 Additional spend from current passengers encouraged to 175,000 175,000 175,000 increase spend from £20 to £25 (£)

Additional train passengers p.a. 20,000 25,000 30,000 Spend per visitor (£) 25 25 25

Spend @ £25 per visitor (£) 500,000 625,000 750,000 Gross Additional Gain (£) 675,000 800,000 925,000 Allowance for Displacement & Deadweight (£) 270,000 320,000 370,000 Composite Multiplier Effects (@ 0.28) (£) 75,600 89,600 103,600 Net Additional Gain p.a.(£) 345,600 409,600 473,600

4.18 The gross visitor expenditure total, represented by the gross additional gain figure, estimates the total amount of expenditure made in the local economy by increased tourist visits on the railway. We estimate this at between £675,000 and £925,000. The gross figure has then been reduced by 60% to account for deadweight, displacement, leakage etc. As a large number of the visitors are expected to come from the Staffordshire area, displacement is expected to be particularly high. Once visitor numbers have increased to reflect full scale-up, the anticipated net increase in spend in the local economy is £345,600 in scenario 1, £409,600 in scenario 2, or £473,600 in scenario 3.

4.19 Our analysis above follows HM Treasury Green Book guidelines on the assessment of net additional economic impact from project interventions. From that perspective it is the net additional gain which is of foremost importance once deadweight and displacement are accounted for. However, at the local level in respect of the town of Leek it is worthwhile noting that the full scale of the gross benefit will be experienced as additional spend is injected into the local economy. Spending in shops, bars, restaurants etc. will inject money into Leek businesses that will subsequently re-spend it in their supply chains so that further rounds of spending and economic impact are experienced. This represents a significant opportunity to stimulate Leek’s visitor economy and provide a platform for further growth in future.

Moorland & City Railway Heritage Railway Extension into Leek September 2013

4.20 The following table includes a scale up of 20% per year to reflect the fact that an increase in visitors and visitor spend would not be immediate. Again, we estimate £40,000 of spending is required to support 1 FTE job equivalent. Once visitor expenditure has scaled up fully, we estimate the additional expenditure will support between 8.6 and 11.8 FTE jobs.

Additionality from Visitors – Expenditure Expenditure per Scenario 1 Scenario 2 Scenario 3 annum (£) 1 69,120 81,920 94,720 2 138,240 163,840 189,440 3 207,360 245.760 284,160 4 276,480 327,680 378,880 5 345,600 409,600 473,600 Additionality - Jobs Scenario 1 Scenario 2 Scenario 3 Visitor Expenditure 345,600 409,600 473,600 (£) Expenditure per FTE 40,000 40,000 40,000 Job (£) 1 1.7 2.0 2.4 2 3.5 4.1 4.7 3 5.2 6.1 7.1 4 6.9 8.2 9.5 5 8.6 10.2 11.8 FTE Jobs 8.6 10.2 11.8

4.21 Estimating £19,000 of GVA per FTE job supported, we calculate that via the FTE jobs supported, additional tourist expenditure in the area would support an additional £164,160 GVA in scenario 1, £194,560 GVA in scenario 2, or £224,960 GVA in scenario 3.

Additionality GVA Year Scenario 1 (£) Scenario 2 (£) Scenario 3 (£) 1 32,832 38,912 44,992 2 65,664 77,824 89,984 3 98,496 116,736 134,976 4 131,328 155,648 179,968 5 164,160 194,560 224,960

FTE Jobs 8.6 10.2 11.8 GVA per Job (£) 19,000 19,000 19,000 GVA from FTE Jobs 164,160 194,560 224,960 (£)

Moorland & City Railway Heritage Railway Extension into Leek September 2013

Summary

4.22 In summary, operation of an extended MCR/CVR as an enhanced tourism attraction would have a wider economic impact on the local economy. For scenario 2, which represents the mid-range estimate for increase in visitors in the short-term, the effect on the local economy could amount to the following (excluding the construction phase) as summarised in the table below based on the preceding analysis in this section:

£952,000 gross expenditure per annum from the railway’s operation predominantly focused on the town of Leek £577,600 net additional expenditure per annum injected into the local economy 13.4 FTE jobs supported , and a net increase in GVA of £255,360 per annum after five years

4.23 However, given the rural nature of the area a greater impact would be experienced as local jobs for residents of an area with a low employment density would be provided, thereby expanding local employment opportunities even if only in a small way. Simultaneously, the railway extension into Leek would also positively impact on the tourism offer of both Leek and the district, which is a stated policy objective.

4.24 By increasing the volume of visitors who come from outside Staffordshire the scale of net economic benefit would be increased as local displacement would not occur and the net additional amount of money brought into the local economy would increase. The CVR is marketing itself more widely and having some success in drawing visitors from further afield which would be a strategy to support growth in visitor numbers for the extended service too. Consequently, we consider the analysis presented here to be realistic but conservative in nature. It is realistic for the early years after the extension and would provide a basis for further growth if the railway offering could be more extensively promoted and placed in the market with appropriate visibility.

4.25 The scale of the effects on the economy is strongly dependent upon the increase in tourists attracted to the area as it is the increased volume of visitors which will drive the local economic impact. The tables below provides our summary of the gross and net economic benefits that could accrue from the railway extension into Leek in the early years of operation based on Scenario 2 which is our mid-range scenario and the one we consider most likely in the initial five years after opening. Reported impacts (excluding temporary construction effects) are per annum and are expected to be on-going. The gross effects represent estimates of the observable impacts of the railway extension, i.e. the increased expenditure of tourists attracted to the area. The net effects take account of displacement, leakage and deadweight as discussed above. For Economic Appraisal purposes, the net figures are more relevant to consider. Successfully implementing the extension to Leek provides a solid platform for further growth and complements the work by other parties to raise Leek’s tourism profile and offer. Beyond the initial five years of our assessment we would anticipate the scale of impact increasing further as tourism numbers increase.

Moorland & City Railway Heritage Railway Extension into Leek September 2013

Scenario 2 -Gross Type of Effect Expenditure FTE Jobs GVA Based on FTE Jobs Temporary Construction supply chain £1,200,000 2.10 £39,900 Direct £40,000 3.00 £57,000 Indirect £100,000 1.00 £19,000 Induced £12,000 0.3 £5,700 Visitor Effects Scenario 2 £800,000 20.0 £380,000

Totals per annum (excl £952,000 24.3 £461,700 construction), Scenario 2

Scenario 2 - Net Type of Effect Expenditure FTE Jobs GVA Based on FTE Jobs Temporary Construction supply chain £1,200,000 2.10 £39,900 Direct £40,000 2.00 £38,000 Indirect £100,000 1.00 £19,000 Induced £8,000 0.2 £3,800 Visitor Effects Scenario 2 £409,600 10.2 £194,560

Totals per annum (excl £557,600 13.4 £255,360 construction), Scenario 2

Moorland & City Railway Heritage Railway Extension into Leek September 2013

5 Conclusions

5.1 This Summary Report has assessed the potential economic benefits that could be derived from the proposed heritage railway extension to Leek. Informing this appraisal has been a review of the development proposals in the context of: the “fit” with tourism related strategies; the opportunity to optimise growth in relevant markets including the tourism market and the heritage/steam railways sector; and the current performance and market position of the CVR.

5.2 What is clear is that the proposed rail development proposals “tick” a number of boxes including:

Acknowledging the value of tourism to the local economy with the CVR already playing an important role in drawing people to the area and acting as an attractor and destination in its own right. The importance placed by the Council on developing its tourist products in general and specifically in the Churnet Valley, with industrial heritage identified as one of the key sectors. The potential to differentiate the Churnet Valley from its competitors (in other locations) through the development of complementary activities/facilities/attractions of which the railway is one. The role that can be played by the extended railway in linking together other attractions as well as “moving people”. The need to enhance dwell times and visitor spend to which the railway extension will contribute

5.3 Based on this (and other supporting data), the summary economic appraisal confirmed the positive impact of the rail extension to Leek in terms of employment and expenditure. The appraisal considered 3 scenarios in relation to potential increases in the number of visitors i.e. 20,000, 25,000 and 30,000 . Taking the second scenario – an additional 25,000 visitors per annum – as being realistic and achievable, the impact (excluding construction) could result in the following:

5.4 Given the rural nature of the area, these impacts are considered important and could be further enhanced if the other MCR plan are realised. Moreover, these benefits form part of a platform for further growth beyond the next five years as the railway implements further plans for its growth and development.

Moorland & City Railway Heritage Railway Extension into Leek September 2013

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