LOCAL ECONOMIC EFFECTS – TECHNICAL NOTE

1.1 Greengage Environmental Ltd have been commissioned on behalf of Moto Hospitality Ltd (hereafter ‘Moto’) to prepare a response to the Economic Assessment, Supplementary Written Statement of Evidence prepared by Simon Elliott on behalf of Applegreen PLC in relation to the Vale of York MSA. In order to understand the likely level of job creation from this proposal, it is necessary to review the employment projections against Moto’s recent application for the Ripon MSA. This Economic technical note therefore includes a comparison of Moto’s and Applegreen’s projected jobs and considers the points raised by Simon Elliott and those previously raised by Tony Collins on behalf of Moto.

Ripon MSA Employment

1.2 The predicted FTE job creation in the Ripon MSA Socio Economic Environmental Statement (ES) Chapter is 102 FTE jobs. This is based on indicative net internal areas (NIAs) and the application of densities from the Homes and Community Agency Employment Density Guide1 (EDG). This is the industry standard and represents a robust and commonly used method to assess employment job creation in planning applications and ESs.

1.3 The Socio-economic ES Chapter then included an additionality assessment based on the Homes and Communities Agency Additionality Guide2. Again, this is the industry standard method of assessing the indirect and induced jobs from a development to a specific target area. This concluded that these 102 on-site FTE jobs would result 89.3 FTE direct and induced jobs at the regional level and 63 direct and induced jobs within Harrogate Borough and Hamilton District.

1.4 Based on Moto’s operational experience at other sites, Moto prepared a separate Socio and Economic Statement for the Ripon MSA which stated that:

‘Experience at other large (comparable) Moto sites such as Wetherby, suggests that the total number of direct jobs on site would actually be around 200 thus increasing the positive impact on the local economy yet further than the estimations given.’

1.5 Therefore, the FTE jobs in the Ripon MSA Socio-economic ES Chapter are considered a robust, conservative estimate of employment generation based on industry practice using standard methodologies with 200 FTE jobs the employment generation based on Moto’s operational experience at comparable sites including Wetherby.

1.6 The Council have stated the following with regards to employment at Ripon MSA in their Statement of Case:

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“4.6.1 In terms of economic benefits beyond construction activity the proposed development would create a number of jobs which may not be as expansive as indicated by the appellant and would primarily be low paid and low skilled”.

1.7 The Council’s previous committee on the Rispon MSA report stated:

“3.99 During construction 14 full time jobs in the economy of North Yorkshire are predicted in the submitted Socio and Economic statement, 9.2. in the ‘Local Impact Area’ of Harrogate Borough and Hambleton District.

3.100 Once operational a net increase of 89.3 full time jobs (or equivalents) in North Yorkshire is predicted of which 63 would be in the ‘Local Impact Area’. In comparison with other sites the total number of direct jobs on sites is stated as being around 200.

3.101 The £30m capital investment in the district, creation of 200 jobs and resultant supply chain opportunities created, is welcomed from an economic development viewpoint and if approved the applicant would be encouraged to ensure as much of the supply chain as possible are local businesses.

3.102 In conclusion, the proposed development is positive in terms of employment generation”.

Vale of York MSA Employment

Methodology

1.8 In paragraph 2.2.2 Mr Elliott states:

‘My methodology, as set out in section 2 of my Written Statement, is not based on the ES, which is quite clear from the many differences between my results and those set out in the ES. I suspect that Mr Collins might have misunderstood my evidence since I referred to the same paragraph 12.4.15 of the ES for completeness.’

1.9 Within the Written Statement, Mr Elliott summarises his methodology in paragraph 2.4.2 as follows:

‘Consequently, the Appellant reviewed their financial modelling for the site, taking into account factors such as the anticipated traffic levels, the probable number and type of outlets, minimum employment requirements for health and safety during quiet periods and the number of staff required to maximise turnover of visitors during the busiest periods. The model was based on the Welcome Break MSAs across England, Scotland and Wales to provide robust inputs such as the amount of turnover that is required to support a job.’

1.10 The use of actual operational data is considered wholly acceptable given the huge inaccuracy of ES figures which claim that the proposals would create 76 Professional and Associate

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Professional jobs and 66 Professional Occupations. However, the absence of published operational employment figures from other Welcome Breaks makes it impossible to draw comparisons and understand the source of the Appellant’s predicted job creation. It cannot therefore be reliable.

Managerial Occupations

1.11 Table 2 of Mr Elliott’s written statement identifies that 241 employees would be employed directly by the Appellant including 7 in the Appellant’s Head Office. Mr Elliott states that 45 FTE (18.7%) would be manager/ service leader positions. In Mr Elliott’s Supplementary Written Statement, he acknowledges that these manager/ service leader positions would not all qualify as managerial occupations under the ONS Standard Occupation Classification. This is considered acceptable given that Moto estimate from their operational figures that circa 2-3% of its MSA staff are managerial occupations.

1.12 This conclusion is consistent with the Council’s SOC for the Ripon MSA which stated that:

“4.6.1 In terms of economic benefits beyond construction activity the proposed development would create a number of jobs which may not be as expansive as indicated by the appellant and would primarily be low paid and low skilled”.

Working Patterns

1.13 In Mr Elliott’s Written Statement, Mr Elliott attempts to verify Applegreen’s operational employment projections by comparing these to the figures in the Homes and Community Agency Employment Density Guide3 (EDG) and scaling these up to consider the implications for 24 hour working.

1.14 With regard to 24 hour working, paragraph 5.19 and 5.20 of the EDG state that:

‘As such the density figures presented allow for usual hours of operation, such as 24 hour working within many distribution activities, and therefore do not requirement adjustment to allow for these trends. However, at an operator or development specific level it may be necessary to adjust the figures if they propose a significantly different operating approach.’

1.15 In Tables 3 to 8 of the Written Statement Mr Elliott sets out the calculations for these. The choice of statistics used from the EDG is considered acceptable using densities set out in the EDG. However, Mr Elliott states that the Net Internal Areas (NIAs) are indicative which is commonly the case with this type of planning application.

1.16 The scale up of EDG densities to account for 24-hour working is unusual and does not appear to account for the likelihood of a lower proportion of FTE working during normal café/ retail hours due to the nature of the MSA. Furthermore, in comparison no other recent MSA EIAs set

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out in Table 1 of the Written Statement use this scaling approach relying instead on the industry standard approach of operational data or EDG densities only.

1.17 As an example, in Mr Elliott’s Supplementary Written Statement, Mr Elliott claims that Moto applications underestimate employee counts as they use standard employment multipliers without implications of 24-hour working or operational requirements. However, while EDG statistics were used for Moto’s applications at Ripon, Rugby, Warrington and Doncaster, these figures are considered to only be slight underestimate in the operational number of employees on existing Moto sites.

1.18 Again, it should be noted that the most recent Extra application set out in Table 1 of Mr Elliott’s written statement also uses standard employment multipliers from the EDG. As such given that scale up from the EDG is not commonplace, the reliability of these figures based on scale up of employment multipliers is highly doubtful.

1.19 Nevertheless, Mr Elliott’s scale up for 24-hour working considers the minimum requirements for 2 operational employees per unit outside of standard hours and 30 hours to be equivalent to one FTE. Mr Elliott states that the ONS typically use 30 hours as the threshold for a full- time job but this is not the case as the average number of weekly working hours for one FTE employee in the UK in 2019 was 37.2 hours4. The use 30 hours to represent one FTE is misleading and clearly overestimates employment.

1.20 Therefore, considering 37 hours as equivalent to 1 FTE, an updated set of calculations based on Tables 3 to 8 of Mr Elliott’s written statement is set out in Table 1.1 below with amendments to Mr Elliott’s calculations in strikethrough.

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On-site jobs based on EDG and 37 hour FTE

Type FTEs in typical FTEs outside of Total FTEs hours of typical hours operation

Café 18.7 6.0 4.9 23.5

Drive-Thru 6.7 6.0 4.9 11.5

Restaurant 15.0 6.0 4.9 19.9

Food Retail 11.0 5.5 4.4 15.4

Non-Food Retail 13.5 7.2 5.8 19.3

Forecourt 22.5 0 22.5

Revised Total 112.8

Appellant Estimate 113

1.21 This leaves 94 jobs unaccounted for which Mr Elliott qualifies will come from the 7 Quick Service outlets. It is highly doubtful the extent that these approximations can be relied upon considering:

• Mr Elliott’s calculations are based on a 30 hour working week for FTE and therefore represent an overestimate. The actual FTE jobs based on a one FTE equivalent to 37 hours would be 76 FTE jobs;

• No reference is provided for the approximation of the number of staff associated with these outlets; and

• No confirmation is provided as to the number of outlets that will operate outside of standard hours.

Employment from Operations

1.22 Mr Elliott estimates that there will be 27 FTE jobs in operations, 7 in the Head Office and 65 employed by third parties (due to external maintenance contracts and concession units). The quantum of employees in operations is considered to be likely an overestimate given that these are at the upper end of existing MSAs operated by the Appellant.

Third Part Employment

1.23 The Appellant predicted 65 FTE from third parties including concession units and external maintenance contracts.

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1.24 In relation to the 40 FTE jobs from concession units, Mr Elliott states in paragraph 2.5.22 of his Written Statement that:

‘For the 40 FTE jobs in the concession units, a similar assessment to that carried out for the customer-facing staff directly employed by the Appellant is probably the best approach, although I do not consider it ideal. Assuming four units, as described in Table 2, and applying a minimum of two staff at all times with 30 hours equating to one FTE, this would equate to 44.8 FTE jobs. The reason I say that this is not ideal is because, except for Krispy Kreme (another quick service outlet comparable to those operated by the Appellant), I think it likely that employment will be more erratic and not evenly split between the uses. Notwithstanding this, the estimates are sufficiently comparable to give confidence that an estimate of 40 FTE jobs is reasonable.’

1.25 It is highly unlikely that this quantum of jobs is credible or accurate upon given that:

• There is an absence of financial modelling;

• Mr Elliott’s calculations are based on a 30 hour working week for FTE; and

• Mr Elliott admits that the employment is erratic and not evenly split between uses.

1.26 In relation to the 25 FTE jobs from external maintenance contracts, Mr Elliott states in paragraph 2.5.22 of his Written Statement that:

‘The final element therefore relates to the external maintenance contracts, which account for 25 FTE jobs. In many similar assessments I would suggest that these should not be part of the gross employment but instead be included in the net figure as part of the economic multiplier (see my Chapter 3). In this case however, the MSA is sufficiently large that it is reasonable to assume that, averaged over say a month, there would be this number of third-party staff working at the site. They will not necessarily be the same individuals, although some will be, but the number of different roles that these will need to fulfil on a regular basis gives me the confidence to believe that 25 FTE jobs is a realistic figure.’

1.27 Therefore, Mr Elliott confirms that these third-party jobs should not be included as part of gross employment and should only be considered as part of the net economic multiplier figure. As raised previously by Mr Collins, third party suppliers are contracted, would be existing businesses and the MSA would not provide continuous employment to these contractors. It is still considered that there is insufficient justification to justify additional jobs of any scale. In addition, with the absence of detailed robust evidence provided by the Appellant to confirm this figure, it is not clear if some of the 25 FTE jobs from external maintenance contracts may be reduced due to the relatively high number of staff that are predicted to be employed directly through operations (27 FTE) and subsequent reductions in third party outsourcing.

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Other Differences in Employment Calculations

1.28 In Table 1 of Mr Elliott’s Written Statement, he also compares the proposals FTE provision to job counts at existing operational MSAs at Beaconsfield, Cobham, Peterborough and Baldock operated by Extra. These existing operational MSAs operated by Extra provide 170 to 362 jobs. Crucially these are not all FTE jobs and Mr Elliott makes no attempt to consider what the number of FTE jobs would be from these operational MSAs or other recently submitted MSA developments set out in Table 1. The comparison between FTE jobs and non-FTE jobs is deliberately misleading.

1.29 In addition, based on operational data and experience Moto estimate that the Ripon MSA would create 200 FTE jobs, while this is an uplift of the operational jobs identified in the EIA based on EDG multipliers, it does not prove that the 300 FTE jobs that Mr Elliott is suggesting will be provided are realistic even when considering differences in customer volumes. This is particularly the case given that Applegreen’s proposals do not provide a lodge which is a relatively high source of operational employment. As previously set out by Mr Collins, based on operational knowledge and experience, Moto expect the proposals to generate around 200 FTE jobs.

1.30 This is consistent with the number of FTE at Wetherby which is around 200 on this section of the A1(M) with its consequent high levels of passing traffic.

Conclusions and Comparison

1.31 Overall, the level of FTE provision from the Applegreen MSA is not considered to be accurate or robust and is likely to be a substantial overestimate. Despite Mr Elliott’s claims that around 300 FTE jobs will be provided, only 200 FTE jobs are expected based on Moto’s operational knowledge and considering the differences between Moto’s and Applegreen’s proposals.

1.32 Mr Elliott’s calculations are based on a number of assumptions that are unreliable including:

• Scaling up EDG values with an absence of robust operational data cited to back this up;

• The use of 30 hrs to represent a FTE worker when average weekly FTE hours are 37.2 hours;

• Making direct comparisons between FTE and non-FTE jobs without clarifications;

• The absence of financial modelling for third party employment; and

• Considering third party contractors as part of gross employment figures.

1.33 In contrast, Moto’s calculations for the Ripon MSA are considerably more robust given that:

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• The Socio-economic ES Chapter used a conservative estimate of direct jobs based on EDG values (102 FTE jobs) with operational data from Wetherby and other Moto sites across the UK used to quantify the likely number of direct jobs (200 FTE jobs);

• The quantum of FTE jobs excludes third party employment sources; and

• The level of job creation is not significantly higher than that suggested for other direct FTE operational jobs for other MSAs including Moto and Extra.

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References

1 Homes and Community Agency (2015); Employment Density Guide, 3rd Edition. 2 Homes and Community Agency (2014); Additional Guide, 4th Edition. 3 Homes and Community Agency (2015); Employment Density Guide, 3rd Edition. 4 ONS (2020); Average actual weekly hours of work for full-time workers. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandw orkinghours/timeseries/ybuy/lms

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