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St George’s Barracks,

Employment Strategy

Report by BBP Regeneration

For [Client]

[Publication date]

December 2018 ITEM 33

Report prepared by:

Studio 432, Metal Box Factory 30 Great Guildford Street London, SE1 0HS

[email protected] www.bbpregeneration.co.uk

Job number: 2802

Version: 2.3

Prepared by: Stephen Pritchard / Chris Tilley

Checked by: Stephen Pritchard

Status: FINAL

Document detai © BBP Regeneration 2018 - Neither the whole nor any part of this report may be published in any way without prior consent.

Disclaimer: This report is only for the benefit of the party to whom it is addressed, and no responsibility or liability is extended to any third party for the whole or any part of its

contents. Whilst every effort has been made to ensure the accuracy of its content, the report has l

s been prepared on the basis of information available at the date of publication and without any independent verification.

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Contents

1. Introduction ...... 4 2. Context ...... 6 Demographics ...... 6 Socio-Economic Profile of Residents ...... 6 Employment in Rutland ...... 6 Business Base in Rutland...... 7 Commuting Patterns ...... 9 Strategic Context ...... 10 Employment Land ...... 11 Feedback from Employers’ Workshop ...... 12 Feedback from Local Agent Consultation ...... 13 Viability ...... 13 3. St George’s Employment Needs ...... 15 Emerging Masterplan ...... 15 Home Working ...... 16 4. St George’s – delivering the Employment Offer ...... 18

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1. Introduction

This paper has been prepared to consider the types of jobs and types of businesses that can be attracted to St Georges and the ‘offer’ in terms of sites and premises that needs to be made available. The paper will help shape and form part of the evidence for the masterplan. It will also be used to inform investment decisions, bids for funding and delivery arrangements. The focus of the paper is on jobs which will be accommodated with ‘B Use Class’ properties.

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2

Context

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2. Context

Bordering the counties of Lincolnshire, Leicestershire, Northamptonshire, Rutland is the most rural county in England, with high quality of life seen as a major attractor to the area. Rutland is affluent with a highly skilled population and a low unemployment rate. In this section we have summarised the key baseline socio-economic characteristics providing a context for the plans for St Georges Barracks. Demographics

• The resident population of Rutland was 38,600 in 2016 • Of this, 59% is of working age, and 24% is aged 65+ • These percentages are similar to the averages in rural areas across the country. However, the working age population is smaller and the 65+ population is larger than in the Greater Cambridge Greater Peterborough LEP (GCGP) and the UK • Reflecting the trend seen across the country, there has been significant growth in the population aged 65+ between 2012 and 2016 and some increase, albeit much smaller, in the population aged 16-24, contrary to comparator locations in the same time period Socio-Economic Profile of Residents

• According to the Rutland County Council Employment Review; “Rutland is affluent with a highly skilled population” • The economic activity rate is 82%. This is similar to the national average and all comparator areas • Resident earnings are higher than workplace earnings (£28,800 and £23,900 respectively), suggesting that residents commute out of Rutland for higher paying jobs • The proportion of residents qualified to NVQ4 (degree level) is significantly higher than in all comparator areas (46%) • There is anecdotal evidence that local businesses struggle to recruit suitably qualified and experienced staff, particularly in higher value sectors and activities; and also experience difficulty recruiting lower qualified and paid staff who are less willing to travel far to work Employment in Rutland

• Total employment in Rutland was 15,000 in 2015 • This declined over the period between 2011 and 2015, contrary to all comparator locations • Job density1 of 0.85 in 2015 is the same as for the Greater Cambridgeshire and Greater Peterborough LEP, and greater than other comparator areas • According to the Rutland County Council Employment Review; “Double national average employment in public sector. Highly dependent on public sector employment”

1 Jobs Density = the total number of filled jobs in Rutland divided by the resident population of working age in Rutland

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Business Base in Rutland

• Key sectors by location quotient2 are; Education (1.9), Manufacturing (1.9), Accommodation & Food Services (1.6) and Retail (1.4) • The Professional, Scientific & Technical sector is the strongest office-based sector; it has the largest number of businesses and employs the largest number of people • According to Rutland County Council, traditional rural industries are declining and “the range of employment opportunities is limited” in the sector • Rutland has a similar business size-profile to comparator areas. Micro businesses (0-9 employees) comprise 89% of the total business count • Entrepreneurialism and small business growth is seen as a major driver of the local economy with potential for current out-commuters to establish businesses in Rutland • Business births increased between 2012 and 2016, is in line with comparator areas (although less than in the and UK) • Business survival rates are similar to comparator areas • Total Gross Value Added (GVA) has increased between 2010 and 2015, but at a lower rate than in all comparator areas • GVA per head has increased slightly in the period between 2010 and 2015, but remains lower than in comparator areas • There is a decline in rural industries • Tourism is important to the area

2 Location Quotient = the concentration of employment in a sector in Rutland divided by the concentration of employment in that sector nationally. LQ>1.0 = a higher concentration of employment in that sector than nationally. LQ<1.0 = a lower concentration of employment in that sector than nationally

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Figure 1 - Businesses by sector, percentage

Source: ONS Business Counts – Local Units, 2015; chart from Employment Land Assessment Update (BE Group, 2016)

• Figure 1 above shows the number of businesses by sector in Rutland in comparison to the region and the whole of Great Britain. These figures demonstrate the strength of the agricultural, forestry and fishing and professional, scientific and technical sectors, which make up a larger proportion of businesses in Rutland than they do nationally. Rutland is slightly weaker in the construction, retail, warehouse and storage and financial and insurance sectors when compared to the rest of the East midlands and the country as a whole.

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Commuting Patterns

• According to the 2011 Census of Population, 6,400 residents commute out of Rutland to work elsewhere, and 6,800 people commute into Rutland to work, so Rutland is a net importer of workers • South Kesteven is the top destination of workers from Rutland and is also the largest supplier of workers to Rutland • 53% of Rutland’s working residents live and work within Rutland • Rutland County Council states that Rutland is in the Peterborough travel to work area, within the Peterborough Housing Market Area (HMA), and also has functional links with the Leicester and Leicestershire HMA • As mentioned above, resident earnings (£28,700) are higher than workplace earnings (£23,900) in Rutland, which suggests out-commuting for higher pay jobs • Ensuring infrastructure (e.g. broadband) is in place may persuade some out-commuters to work more from home

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Strategic Context

We have reviewed a number of key economic development strategies and have set out the most pertinent messages below.

Rutland Economic Growth Strategy (2014-2021)

The County Council’s economic growth strategy is set within four strategic themes; enterprise and innovation; education, employment and skills; land, development and infrastructure; and inward investment. It’s aims are to boost start up rates in order to create new SME and employment growth, whilst retaining and supporting existing businesses and continuing to develop key sectors such as manufacturing, tourism and service-based industries. Knowledge and innovation are identified as future drivers of the economy. The strategy promotes signposting and connecting businesses to where they can get support for the commercialisation of ideas in order for the business base to remain competitive and grow. The strategy prioritises skills development where there are genuine skills barriers to growth to ensure young people are sufficiently prepared for work and have greater awareness of and access to an enhanced range of apprenticeships. Providing a greater breadth of employment in line with the high resident skills base is a strategic aim to address the current unsustainable levels of out- commuting. This also requires improving the educational and employment outcomes for those without qualifications. Improvements to infrastructure are also required so that business growth is not constrained by poor infrastructure, that housing and business development is appropriately located and there is greater access to affordable housing. Prioritisation will be for transport schemes that support rural businesses and the local economy.

Greater Cambridge Greater Peterborough LEP

Rutland is geographically relatively peripheral in the LEP, and its core economy is not typical of the LEP area, although there is alignment with some key sectors. The LEP key sectors are: • Biotech and Life Sciences • ICT and Telecommunications • Low carbon environmental goods and services • Manufacturing, Engineering and Processing • Agriculture, Food and Drink • Logistics • Water and Energy • Creative Industries • Visitor economy

Leicester and Leicestershire LEP

• The LEP does not identify priority sectors but manufacturing/production is the largest sector by employment and GVA • The LEP would like to increase the proportion of residents that are employed in the knowledge- based economy, to match the national average

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Employment Land

County wide employment land needs

The county’s latest Employment Land Report, updated in May 2018, concluded that there were 18.93 Ha of employment land that are likely to come forward for development in a realistic scenario.

Future projections of need set out two scenarios which show widely differing results. The short term take-up scenario shows an existing over-supply. However, the long term take-up scenario shows that there is a requirement to provide an additional 25 ha of employment land. The report concludes that: “Rutland County Council maintain a flexible employment land supply, which can meet the full range of needs to 2036, provide choice and flexibility in supply, allowing for likely further losses”. It is understood that the Local Plan review will make additional provision to cater for the long term take-up scenario, provide choice and flexibility in the supply to the market and ensure that sufficient land is available to meet aspirations for the local economy. On this basis it is proposed to allocate about 25 ha of additional land for employment purposes which may come forward through allocations at: St Georges – 14 ha Uppingham Gate – 6.8ha Pitt Lane Ketton – 1.4 ha Land to the north of Burley Road, – 2.8 ha This still assumes that other key sites are safeguarded for employment, e.g. Oakham North which is the single key strategic employment allocation in our main town.

Key Sites The principal business corridor of Oakham North West accommodates a number of the county’s larger businesses, while Uppingham Gate is the main office park in Uppingham and the location of a number of knowledge-based businesses. Uppingham’s main manufacturing location is Station Road Industrial Estate. Rutland Council has taken the lead in developing and managing several of the county’s key employment sites at Oakham Enterprise Park and the King Centre. Oakham Enterprise Park

The 10.1 Ha former Ashwell Prison site (Oakham Enterprise Park) was acquired by the County Council in late 2012 for redevelopment/refurbishment as a mixed-use scheme, including employment uses. The Enterprise Park now provides around 9,850 sq m of floorspace to over 100 tenants. Approximately 4.9 Ha of land on the site remains vacant and a phased development strategy is being undertaken with new infrastructure and advanced industrial buildings under development. Industrial/warehouse space at Oakham Enterprise Park has quoting rents of £37.67 to £53.82 per sq m (£3.50 to £5 per sq ft) and office units with quoting rents of £59.20 to £91.49 per sq m (£5.50- £8.50 per sq ft). These are lower than average rents for the county. Existing units are operating at capacity with only occasional void periods.

The King Centre, Oakham

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Converted by Rutland Council from the former Rutland County College site at , Oakham, to flexible business space for professional businesses, mainly technology and research companies. It will offer 1,114 sq m of accommodation, comprising 29 B1 units including four laboratory units. Quoting rents at the King Centre are £107.64 per sq m (£10 per sq ft) with a service charge of £86.11 per sq m (£8 per sq ft). Ashwell Business Units

Located around 1.5 miles north of Oakham, with links to the A1, Stamford, Peterborough and Melton Mowbray, this Rutland Council-run site comprises two buildings; one containing workshop units and the other office units, with car parking and communal facilities. It is understood that all units are let at this site. Ketton Business Estate

The development comprises eight workshop units with roller shutter doors, five purpose-built units, and a converted barn, comprising three units. All have recently been refurbished, have three-phase electricity and parking facilities. The majority of these units are let with rents at £53.82 to £64.58 per sq m (£5-£6 per sq ft). Uppingham Gate

This 3ha greenfield development site is proposed for employment under Policy 6 of the Uppingham Neighbourhood Plan, which supports the approval of the site as an extension of the employment offer at Uppingham Gate for B1, B2, B8 and waste related uses including: • A Data Centre, Techno Hub or other high-tech employer (s) • Light industry start-up units • A garage with fuel and a small shop • Office units • Light electrical • Health Care Product related employment • Environment friendly start ups • Transport/coach interchange with public car parking

Demand Side

The Rutland Take-Up and OAN Study prepared by BE Group in 2018 updates the findings relating to future demand for employment space of the Employment Land Assessment Update of 2016, which considered both historic take-up and econometric forecasts using the East of England (2014) forecast modelling by Oxford Economics that projects likely jobs growth in different industry sectors. From analysis of historic take-up in the period 2012-2017, the 2018 study concluded that the take- up rate for employment land is 0.55 ha/year.

Feedback from Employers’ Workshop

An employer’s workshop was held on 28 August to seek feedback on the emerging masterplan proposal for St Georges Barracks. This was attended by 10 employers representing a good cross section of business sectors. Generally, there was positive feedback to the principle of a significant allocation for employment land at St Georges. Employers were seeking a mixed portfolio of sites and properties from small start-up spaces to larger sites for purpose-built accommodation.

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The availability of low cost affordable housing was viewed as important as housing affordability is proving a serious constraint to employer’s ability to attract staff. Good quality infrastructure in terms of accessibility to the road networks and access to high voltage power were also raised as key issues.

Feedback from Local Agent Consultation

Consultation with local commercial agent, Moores Commercial, indicated that demand within the county is principally for smaller space, with most commercial occupiers consisting of new start-up businesses and small and medium sized enterprises seeking to move from a home-based working model as they grow. It was suggested that demand from larger occupiers would be more limited, though larger companies could be attracted if offered land on a pre-let or pre-sale basis. In terms of sectors, growth is taking place in the food sector. There is growth in the tourism sector, with nationally significant events taking place on and around Rutland Water. There is potential to attract high-tech/R&D businesses spilling out of Greater Cambridgeshire and Peterborough; although the availability of labour force is a constraint. The market for small light industrial units, built speculatively and available as shell was thought to be particularly strong in the county, with demand also for office workspace to service local residents seeking business space locally. Oakham Enterprise Park services some of this need and is popular with start-ups, though there is demand for more purpose-built accommodation from businesses as they grow. We were informed that there is demand for land for speculative commercial developments from developers operating locally.

Viability

Consultation with local agents, Moores Commercial indicates that demand in the county for business space from small and medium sized enterprises is sufficient to make commercial development of appropriate business space at St George’s financially viable and deliverable by the private sector. Rents for office space in Oakham are currently £107.64 per sq m (£10 per sq ft) while industrial rents for good quality new-build accommodation are around £75.35 per sq m (£7 per sq ft). There is limited comparable evidence for commercial development land values in the county. The latest Local Plan Viability Update, prepared for Rutland County Council by HDH Planning and Development in 2017, assumed commercial development land values to be in the region of £400,000 per ha (£162,000 per acre).

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3

St George’s Employment Needs

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3. St George’s Employment Needs

Emerging Masterplan

This section provides a high-level estimate of the possible levels of employment needed to support a sustainable community at St George’s providing local jobs for local residents. In arriving at an estimate of the number of jobs we have assumed the following:

- 2,245 new homes

- 80% of these will be occupied by new residents, and 20% by existing residents of Rutland (meeting the need for more housing to accommodate smaller households, as household sizes fall).

- Based on 2011 Census data on the number of households, number of workers, and number of Full Time Equivalent (FTE) workers, we have identified that there are 1.2 jobs per household (or 1.1 FTEs per household) in Rutland.

- Using data on employment by sector, and assumptions about the type of premises (by Use Class) that each sector uses, we have mapped employment in Rutland to premises by Use Class.

The analysis provides that the new homes will generate the need for 2,161 new employment opportunities across all sectors of the economy. These are then mapped to Use Classes (using the same distribution as for current employment in Rutland): Planning Use Class Broad Description Number of Jobs A Shops, High St financial 377 services, restaurants, cafes, pubs etc. B Offices, industrial, warehousing 843 and distribution C Hotels and other residential 136 institutions D Non-residential institutions, 510 assembly and leisure Sui Generis (other) Uses not falling in other classes 94 Working at or from home 202 Total 2,161 NB. Numbers may not sum exactly due to rounding

For the B Use Classes, we can calculate the potential requirement for land and premises, based on the employment in these sectors. We can use standard employment density assumptions from the HCA Employment Density Guide (2015), adjusted to take account of FTE employment and net internal, gross internal and gross external areas.

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Our estimates of the amount of workspace and sites required to accommodate the employment in sectors that occupy the B Use Classes can be seen in the figure below: Use Class Workspace (sq m) Site Size (Ha) B1: Offices 9,366 1.7 B2/B1c: General Industrial/Light 11,045 2.8 Industrial B8: Warehousing & Distribution 5,366 1.3 Total 25,776 5.8 NB. Numbers may not sum exactly due to rounding

In addition, Rutland County Council has asked that an additional 8.2Ha of employment land should be allocated at St Georges to make the total proposed allocation of 14Ha. If we take the same approach as above the allocation of land and property over 14Ha is as follows: Use Class Workspace (sq m) Site Size (Ha) B1: Offices 22,607 4.2 B2/B1c: General Industrial/Light 26,661 6.7 Industrial B8: Warehousing & Distribution 12,951 3.2 Total 62,219 14.06

Employment in sectors outside the B Use Classes will be accommodated in other premises (e.g. shops, restaurants, schools etc.), which may or may not be located within the St George’s site.

Home Working

Our assumptions on employment provision take home-working into account. The trend towards home-working or remote working has been growing exponentially over the last decade. The practice of ‘agile’ working, home working and hot desking is becoming more prominent in attempts to reduce business overheads and introduce a better life/work balance. In addition, the impact from the recent prolonged economic recession is still evident, coupled with uncertainties associated with Brexit, making business planning and growth strategies more complex. National and regional data on homeworking shows: • 13.9% of workers were classified as home workers in Q1 2014, the highest since 1998 • Approximately two-thirds of these are self employed • IT, Agriculture and Construction (latter includes trades, eg plumbers, plasterers etc) have the highest proportion of homeworkers • There is a tendency for more rural areas to exhibit higher rates of homeworking • The East Midlands is the most rural area in England & Wales to have a homeworking rate below that of the England & Wales average3 The current distribution of employment in Rutland shows that nine percent of FTEs are not associated with real property. For the purposes of our assumptions with regard to employment provision at the site, this figure of nine percent of the total required FTEs are taken to be represented by home-working in order to reflect the local economic conditions and anticipated trends over the coming years. Thus, assuming 2,215 new homes are delivered at St George’s Barracks, our model suggests that this will generate approximately 200 FTEs of home-working employment.

3 Source: ONS Labour Force Survey (2014)

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4

St George’s – The Employment Offer

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4. St George’s – delivering the Employment Offer

The masterplan for St George’s proposes some of the employment allocation to be dispersed across the new community, but with a main concentration with the northern employment zone. Some more detailed capacity exercises have been undertaken on the northern employment zone. See Annex 1. This assumes a mix of B class uses as follows:

Element Amount Unit Total site area 9.28 ha B1 (Office Building) 4.43 ha B2 (Workshop Unit) 1.65 ha B8 (Storage / Warehouse) 3.20 ha

Two layout options have been prepared for the northern employment zone by Fabrik. Option 1, retains the existing hangars

Option 1

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Option 2, assumes redevelopment of the whole site.

Option 2

A high level cost assessment of Option 1 has been undertaken for this area assuming the area is developed separately from the balance of the St Georges Barracks scheme.

Option 1

Infrastructure

Roads 7.5m 922,355

Roads 6.0m 719,811

Landscaping 70,000

Lighting 445,000

Prelims 1,140,188

Adjustment 59,340

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Fees @ 7.5% 251,752

Total Infrastructure 3,608,446

Serviced Offices (B1A)

1,116 sq m

0 1,062,600

Fit out 0 1,692,800

Total offices 2,755,400

Workshops (B2A)

1,393 sq m

900.37 £/sq m 1,254,210

Total 11,226,502

Say 11,200,000

The cost estimate of £11.2m assumes that the land has been remediated as part of the clean up of the wider site. It also assumes the northern access roads are provided as strategic infrastructure. It assumes that advanced serviced office and workshop are brought forward on a speculative basis. The net developable area for site disposals is 7.51Ha. Assuming a land value of £430,000 per Ha this would generate receipts of c £3.2m. The completed value of the serviced offices and workshops has been assumed at £2.5m. The value of the existing hangers has been assumed at £0.25m. Receipts therefore total £5.95m suggesting a funding gap of c £5.25m. This is a high level analysis which indicates on a standalone basis there is an apparent market failure on financial viability grounds. However, it is intended that the employment offer should be brought forward as part of the wider masterplan and therefore it is reasonable to factor the viability into the wider scheme so that effectively the higher value residential land values cross subsidise the cost of bringing forward the employment land. A more detailed financial analysis should seek to refine costs and value and identify funding to bring forward the serviced employment land and advanced office and workshop units. It is clear from the feedback from consultation as well as initial research that there are some important issues around the nature of the employment offer, how it is integrated into the programme of housing delivery, and how it is brought forward – in particular, what role the Council needs to take to make sure ‘it happens’. There are many examples of strategic housing-led developments where original allocations for employment uses have failed to be brought forward as originally intended, undermining the principles of sustainable development. The delivery options which are available include: A. Planning-led controls through S106 agreements and/or conditions can require an ‘employment implementation plan’ to be submitted for the approval of the Council backed up with trigger points

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(e.g. no more than ‘x’ homes to be occupied prior to ‘y’ sq m of employment space having been completed). B. DIO procurement processes can require a specialist commercial developer to form part of the LSDP consortium and invite proposals for an implementation plan for the employment uses which forms part of the selection process and is backed up with contractual obligations in Development Agreements. C. The Council assuming a lead role as strategic developer (or owner with joint venture partner) of the employment land investing in the necessary infrastructure and promoting serviced plots and potentially advanced office and workshops. This role might be supported by LEP investment through Local Growth funds or other funding sources.

Option A on its own risks not delivering employment uses at the pace required to achieve sustainable development at St Georges and enforcement will prove difficult. Option B is a potential route, but as the main financial value is in the residential uses there are real risks that the employment uses will not get the focus needed by the LSDP. Option C would seem to provide the best assurances that the right product can be delivered at the right time and would seem to be a good fit with the Councils other activities around promoting sites and premises for employment uses. It could also form a useful long- term income stream for the Council.

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