The Economic Impact of London Luton Airport (June 2019)
Total Page:16
File Type:pdf, Size:1020Kb
Future LuToN: Making best use of our runway Preliminary Environmental Information Report Volume 3: Appendices Appendix 13-1 Oxford Economics The Economic Impact of London Luton Airport (June 2019) LLADCO-3B-ARP-00-00-RP-YE-0007 | Issue 1 | October 2019 THE ECONOMIC IMPACT OF LONDON LUTON AIRPORT JUNE 2019 The Economic Impact of London Luton Airport Oxford Economics Oxford Economics was founded in 1981 as a commercial venture with Oxford University’s business college to provide economic forecasting and modelling to UK companies and financial institutions expanding abroad. Since then, we have become one of the world’s foremost independent global advisory firms, providing reports, forecasts and analytical tools on more than 200 countries, 250 industrial sectors, and 4,000 cities and regions. Our best-of-class global economic and industry models and analytical tools give us an unparalleled ability to forecast external market trends and assess their economic, social and business impact. Headquartered in Oxford, England, with regional centres in London, New York, and Singapore, Oxford Economics has offices across the globe in Belfast, Boston, Cape Town, Chicago, Dubai, Frankfurt, Hong Kong, Houston, Johannesburg, Los Angeles, Melbourne, Mexico City, Milan, Paris, Philadelphia, Sydney, Tokyo, and Toronto. We employ 400 full-time staff, including more than 250 professional economists, industry experts and business editors—one of the largest teams of macroeconomists and thought leadership specialists. Our global team is highly skilled in a full range of research techniques and thought leadership capabilities, from econometric modelling, scenario framing, and economic impact analysis to market surveys, case studies, expert panels, and web analytics. Oxford Economics is a key adviser to corporate, financial and government decision-makers and thought leaders. Our worldwide client base now comprises over 1,500 international organisations, including leading multinational companies and financial institutions; key government bodies and trade associations; and top universities, consultancies, and think tanks. June 2019 All data shown in tables and charts are Oxford Economics’ own data, except where otherwise stated and cited in footnotes, and are copyright © Oxford Economics Ltd. This report is confidential to London Luton Airport Limited and may not be published or distributed without their prior written permission. The modelling and results presented here are based on information provided by third parties, upon which Oxford Economics has relied in producing its report and forecasts in good faith. Any subsequent revision or update of those data will affect the assessments and projections shown. To discuss the report further please contact: Nick Stewart: [email protected] Oxford Economics Broadwall House, 21 Broadwall, London, SE1 9PL, UK Tel: +44 203 910 8000 The Economic Impact of London Luton Airport TABLE OF CONTENTS Executive summary ............................................................................................. 1 1. Introduction...................................................................................................... 4 1.1 Previous studies ....................................................................................... 4 1.2 Objective of this study .............................................................................. 4 1.3 Geographical coverage ............................................................................ 5 1.4 Acknowledgements .................................................................................. 6 2. The direct impact of London Luton Airport ...................................................... 9 2.1 Direct contribution to employment ......................................................... 10 2.2 Direct contribution to GDP ..................................................................... 13 2.3 Wages paid by airport employers .......................................................... 14 2.4 Direct contribution to tax revenue .......................................................... 16 3. Multiplier impacts and the total economic impact ......................................... 18 3.1 Impact on the UK ................................................................................... 18 3.2 Impact on the Three Counties sub-region ............................................. 21 3.3 Impact on the Six Counties sub-region .................................................. 22 3.4 Impact on surrounding counties and Thameslink Corridor ...................... 24 3.5 Impact on Luton and other local authority areas .................................... 26 4. The future impact of London Luton Airport to 2039 ...................................... 30 4.1 Direct contribution .................................................................................. 31 4.2 Total economic contribution ................................................................... 33 Appendix 1: Methodology .................................................................................. 40 Appendix 2: Employment data tables ............................................................... 55 Appendix 3: GDP data tables ............................................................................ 62 Appendix 4: Town level and Parlimentary Constituency estimates, 2017 .......... 69 The Economic Impact of London Luton Airport EXECUTIVE SUMMARY This report presents updated estimates of the economic impact of London Luton Airport in 2017. We outline our findings for the airport’s impact on the UK economy as a whole, for the surrounding Three Counties sub-region, for the wider Six Counties sub-region, for the London Thameslink Corridor, and for individual local authority areas. While this is an update on Oxford Economics’ previous studies of the airport, this report draws on more detailed £1.8 billion data sources than have previously been available to us, and incorporates a Total contribution to number of methodological enhancements enabled by these new datasets. UK GDP supported by These changes mean that our findings are not directly comparable to those London Luton Airport from our previous studies. in 2017. CONTRIBUTION TO THE UK ECONOMY For every £1 the airport In 2017, the economic activity supported by London Luton Airport directly contributed to UK contributed some £1.8 billion to UK GDP. Almost half of this contribution GDP itself, it created a came directly from the activities of firms which form an integral part of the further £1.10 elsewhere in airport’s operations. The rest came through their supply chains, and as those the UK economy. working at the airport and in its supply chain spent their wages. This means that for every £1 the airport directly contributes to UK GDP itself, it creates another £1.10 elsewhere in the UK economy. The airport therefore has a “GDP multiplier” of 2.1 across the UK as a whole. The airport is estimated to have sustained a total of 27,500 jobs across the UK in 2017. This comprised 9,900 “direct” jobs at firms which formed an integral part of the airport’s operations; 8,600 jobs within those firms’ supply chains; and 9,000 “induced” jobs that were supported by workers’ spending. So, for every job directly supported by the operations of the airport, another 1.8 are supported elsewhere in the UK economy. This means that the airport’s 27,500 jobs “employment multiplier” is 2.8 across the UK as a whole. CONTRIBUTION TO THE SURROUNDING SUB-REGIONS AND LOCAL Total UK employment AREA supported by London Luton Airport in 2017. London Luton Airport plays an important role in the economy of the local area and surrounding sub-regions. Within the Three Counties area, which For every worker employed includes Bedfordshire (defined in this study to include the Luton Unitary directly by the airport’s Authority area), Buckinghamshire and Hertfordshire, the airport supported a operations, a further 1.8 jobs £1.1 billion contribution to GDP and sustained 15,600 jobs in 2017, including were supported elsewhere through indirect and induced multiplier effects. For the wider Six Counties area, in the economy. which also includes Cambridgeshire, Essex, and Oxfordshire, the airport supported a £1.3 billion contribution to GDP and sustained 19,000 jobs. The greatest economic impacts were felt in the immediate vicinity of the airport, with the largest sub-regional impact occurring in Bedfordshire (defined to include the Luton Unitary Authority area for the purposes of this study). The airport delivered a total GDP contribution of £964 million in Bedfordshire in 2017. This reflects the direct economic impact that arises from the airport’s location within the county, its supply chain linkages within the county, and that more than 58 percent of those employed at the airport live— and are therefore assumed to spend their wages—in the county. 1 The Economic Impact of London Luton Airport Within the Luton Unitary Authority area itself, the airport supported an £878 million contribution to GDP and 10,700 jobs in 2017. The latter figure includes 9,900 jobs at the airport, and a further 800 that were supported in the airport’s extended supply chain and by workers’ spending. IMPACT OF THE AIRPORT’S GROWTH With substantial changes to the capacity of London Luton Airport planned, this study also forecasts how its economic impact will evolve in £3.8 billion the years to 2039. We considered the future economic contribution of London Total contribution to Luton Airport to reflect the