Economic Impact Assessment

The Berkeley Group Economic Impact Assessment Contents Executive summary 1 Background to the study 2 Berkeley’s economic impacts 8 Final remarks 26 Appendix A Timeline 28 Appendix B Glossary 29 Appendix C Economic Impact Assessment Methodology 30 Appendix D References 32

Grosvenor Waterside Executive summary

In November 2012 The Berkeley Group Holdings plc (Berkeley) commissioned Ernst & Young LLP (Ernst & Young) to perform an Economic Impact Assessment of Berkeley’s contribution to the UK economy over the financial years 2008-2012.1 This report presents the results of the Economic Impact Assessment undertaken by Ernst & Young. The analysis is based on Berkeley’s own data, both published and internal, and on publicly available statistics.

Berkeley’s contributions to UK plc 2012 Contribution to the UK economy

Total contribution to Economic Activity in 2012 £2.6bn Total contribution to GDP in 2012 £1bn Employment

Jobs directly or indirectly supported in 2012 16,000 Total number of jobs created per home built 4.5

2008-2012 Tax generation

Total UK tax contribution between 2008 and 2012 £1.1bn International investment Amount of international investment attracted to the UK between 2008 and 2012 £1.9bn Homes built

Number of new homes built in the last five years 13,000 Affordable homes provided (commitments 2008-2012) 7,000 Change in number of homes built 2008-2012 +13% (UK -35%) Development benefits Contribution to infrastructure, education, healthcare and communities through S106 (commitments 2008‑2012) £245m

The Berkeley Group Economic Impact Assessment 1 Background to the study

The Berkeley Group Holdings plc Established in 1976 with the founding of Berkeley Homes in Weybridge, Surrey, in less than four decades The Berkeley Group Holdings plc (“Berkeley”) has become one of the most prominent and successful developers in the UK. 35 Today Berkeley is a FTSE 250 company with a market 2 3 capitalisation of approximately £2bn . Its six divisions: 6 10 Berkeley Homes, St George, St James, Berkeley First, Berkeley 40 Commercial and the joint venture, St Edward, generate over £1bn in annual revenues3. London 4 7 Berkeley is recognised as a leader in the regeneration of complex 7 30 27 14 10 9 1 brownfield sites and the creation of sustainable communities. Its 11 17 22 11 14 16 8 1 2 26 portfolio reflects the aspirations of a broad range of home buyers, 18 19 13 5 6 23 31 13 29 38 25 4 encompassing medium to large-scale developments in towns, 3 8 15 5 33 20 9 2 cities and the countryside, estate regeneration projects, town 12 21 12 36 centre developments, riverside apartments, refurbished historic 28 24 buildings and urban loft spaces as well as student accommodation 39 37 and senior living homes. 34 At the time this report was prepared, Berkeley had 40 active development sites in London, a further 29 in the South East of 32 England and another 32 sites acquired for future development. Berkeley’s ambition is to be one of the most successful and sustainable businesses in Britain. This is guided by its ten-year strategic framework, “Vision2020”, which focuses on four key impact areas:

►► The Customer Experience ►► Building Greener Homes London London under construction London sites in planning ►► Delivering Sustainable Communities 1 375 Kensington High Stre et 21 Langham Square, Putney 1 190 Strand, City of London ►► Running a Sustainable Business 2 Battersea Reach 22 Lime Grove Mews, Hammersmith 2 Abell & Cleland House, Westminster 3 Beaufort Park, Hendon 23 Marine Wharf, Deptford 3 Carnwath Road, Fulham Testament to Berkeley’s success is the number of awards the 4 Blackheath Road, Deptford 24 Marryat Place, Wimbledon* 4 City Forum, City of London* * company has received over the years, including “Britain’s Most 5 Camberwell Grove 25 ONESE 8, Deptford 5 Eastbury House, Albert Embankment 6 Carmelite, Finchley* 26 One Tower Bridge 6 Hampton House, Albert Embankment* Admired Company”, twelve “What House?” Awards in 2011 and 7 Caspian Wharf, Bow 27 Parkwest, West Drayton 7 NEC House, Acton* The Queen’s Award for Sustainability. 8 Chelsea Creek / Imperial Wharf 28 Queen Mary’s Place, Roehampton 8 One Blackfriars, Southwark* 9 Costume Store, Acton 29 Riverlight, Battersea 9 Queen’s Rise, Richmond* 10 Dickens Ya rd, Ealing 30 Roman House, City of London 10 Section House, Finchley* 11 Ebury Square, Belgravia 31 Royal Arsenal Riverside 11 Sir Alexander Close, Acton 12 Emerald Square, Roehampton 32 Saffron Square, Croydon 12 Twickenham Sorting Ofﬁce* 13 Fulham Reach, Hammersmith 33 St Catherine’s Place, New Cross 13 Warwick Road, Kensington (Telereal) 14 Goodmans Fields, Aldgate 34 St James Park Mews, Surbiton 14 Warwick Road, Kensington (H omebase) 15 Griffon Studios, Clapham 35 Stanmore Place 16 Grosvenor Waterside 36 Terrace Ya rd, Richmond 17 Napier, Acton 37 The Boatyard, Kingston 18 Kew Bridge Road 38 The Tower, One St George Wharf 19 Kew Bridge West, Brentford 39 Wimbledon Hill Park 20 Kidbrooke Village 40 Woodberry Park

* Sites purchased during ﬁnancial year 2012

2 The Berkeley Group Economic Impact Assessment E IR SH N CAMBRIDGESHIRE TO W O P 35 RC M 4 E WARWICKSHIRE A ST 23 E H R T E SUFFOL K R S R 3 I H O I H 6 10 R N MILTON E KEYNES S D 40 R O B F U D E C E 5 6 B IR London 27 K H I N S 4 7 GLOUCESTERSHIRE G D 7 30 R ESSEX 27 14 GLOUCESTERSHIRE 20 H FO 10 9 1 7 A 25T 11 17 22 11 M ER OXFORDSHIRE S H 14 16 8 26 H 1 1 2 5 IR 18 19 13 6 23 31 16 2 E3 13 26 15 29 38 25 4 11 8 3 8 15 5 33 LONDON 2 20 9 9 12 21 22 12 36 28 BERKSHIRE 2 13 10 39 24 10 6 17 WILTSHIRE 9 7 4 24 5 37 1 12 15 13 12 11 KENT 34 SURREY 14

32 HAMPSHIRE 18 3 WEST SUSSEX EAST SUSSEX

14 21 19 8

London South East

London under construction London sites in planning Out of London under construction Out of London sites in planning

1 Basingstoke 16 High Wycombe 1 Amersham* 1 375 Kensington High Stre et 21 Langham Square, Putney 1 190 Strand, City of London 2 Beaconsfield 17 Holborough 2 Ascot (2 sites) 2 Battersea Reach 22 Lime Grove Mews, Hammersmith 2 Abell & Cleland House, Westminster 3 Billingshurst 18 Horsham 3 Beaconsfield 3 Beaufort Park, Hendon 23 Marine Wharf, Deptford 3 Carnwath Road, Fulham 4 Cambridge 19 North Bersted 4 Caterham* 4 Blackheath Road, Deptford 24 Marryat Place, Wimbledon* 4 City Forum, City of London* 5 Canterbury 20 Oxford (2 sites) 5 Cheltenham* 5 Camberwell Grove 25 ONESE 8, Deptford 5 Eastbury House, Albert Embankment* 6 Cheltenham 21 Portsmouth 6 Claygate 6 Carmelite, Finchley* 26 One Tower Bridge 6 Hampton House, Albert Embankment* 7 Cirencester 22 Reading 7 Cobham 7 Caspian Wharf, Bow 27 Parkwest, West Drayton 7 NEC House, Acton* 8 Eastbourne 23 Worcester 8 Gerrards Cross (2 sites)* 8 Chelsea Creek / Imperial Wharf 28 Queen Mary’s Place, Roehampton 8 One Blackfriars, Southwark* 9 Effingham 24 Sevenoaks 9 Maidenhead* 9 Costume Store, Acton 29 Riverlight, Battersea 9 Queen’s Rise, Richmond* 10 Esher 25 St Albans 10 Oxshott* 10 Dickens Ya rd, Ealing 30 Roman House, City of London 10 Section House, Finchley* 11 Farnham Common 26 Wantage 11 Reigate 11 Ebury Square, Belgravia 31 Royal Arsenal Riverside 11 Sir Alexander Close, Acton 12 Fleet (2 sites) 27 Woodstock 12 Shalford* 12 Emerald Square, Roehampton 32 Saffron Square, Croydon 12 Twickenham Sorting Office* 13 Gillingham 13 Ta dworth (2 sites)* 13 Fulham Reach, Hammersmith 33 St Catherine’s Place, New Cross 13 Warwick Road, Kensington (Telereal) 14 Gosport 14 Tunbridge Wells* 14 Goodmans Fields, Aldgate 34 St James Park Mews, Surbiton 14 Warwick Road, Kensington (H omebase) 15 Guildford 15 Wantage 15 Griffon Studios, Clapham 35 Stanmore Place 16 Grosvenor Waterside 36 Terrace Ya rd, Richmond 17 Napier, Acton 37 The Boatyard, Kingston * Sites purchased during financial year 2012 18 Kew Bridge Road 38 The Tower, One St George Wharf 19 Kew Bridge West, Brentford 39 Wimbledon Hill Park 20 Kidbrooke Village 40 Woodberry Park

* Sites purchased during ﬁnancial year 2012

The Berkeley Group Economic Impact Assessment 3 112,000 the annual deficit of housing delivery compared to new household formation in England at 2012 home building rates

The housing market in England

Supply and demand Economic impact of housing development The UK has undergone significant population growth and The Government’s growth agenda8 recognises that housing demographic changes over the last 10 years, which has led to delivery is important not only in its own right but also because increased demand for new homes. of the contribution it makes to economic growth and to reducing unemployment, particularly for the young and unskilled workforce. The supply of new homes has failed to match such growth in demand. On the contrary, the chronic undersupply of new housing House building has a significant economic impact: has severely worsened since the economic downturn in 2007. ►► Before the economic downturn in 2008, house building The Department for Communities and Local Government (DCLG) accounted for 335,000 jobs and 1.5% of Gross Domestic estimates that the number of new households in the UK will grow Product (GDP), some £22bn when using 2011 GDP as a by 232,000 every year for the next 20 years4 but fewer than reference. 120,000 homes were built last year.5 ►► We have calculated that, for every additional job created in the At the current pace of construction the number of new homes built construction industry a further 1.53 jobs are created in the is expected to fall short of the number of new households formed wider economy. We therefore estimate that, before the crisis, in England by around 112,000 each year. house building supported approximately 850,000 jobs across the UK. This shortage of new homes can be partly attributable to planning delays, which can cost the economy up to £3bn per year according ►► House building is also a key source of funding for Central to estimates from The National Housing and Planning Advice Unit.6 Government and Local Authorities. Stamp Duty Land Tax (SDLT) generates over £6bn a year9 and Council Tax is The economic recession and the consequent tightening of estimated to generate £23bn.10 the credit market have proven particularly challenging for the industry, which is reliant on access to credit for developers to build ►► Based on these figures, it can be inferred that if the gap new homes. This has worsened the mismatch between demand between supply and demand of new homes were to be and supply of new homes. bridged, the additional 112,000 homes built in the UK could potentially create 220,000 jobs in the economy and contribute Home buyers are also facing difficulties in gaining access to credit. £14bn to GDP. As a consequence, residential property transactions reached a historic post-war low of 736,000 in England in 2009 after the The provision of housing also promotes labour mobility and leads crisis hit in 2008, increasing slightly to 762,000 in 2011.7 This is to better matching of workers with employment opportunities, a contraction of almost 50% compared to the 1.4m transactions thereby increasing the overall efficiency of the economy. completed in England in 2006.

4 The Berkeley Group Economic Impact Assessment 850,000 the number of jobs directly or indirectly supported by new home building in the UK before the crisis

Berkeley’s performance Between 2008 and 2012 Berkeley has:

►► Delivered 13,000 homes ►► Signed Section 106 agreements to provide over 1.6m ft2 of commercial space11 ►► Committed to delivering over £245m worth of investment in public infrastructure through Section 106 agreements12

►► Committed to delivering 83 acres of public realm space ►► Signed commitments to deliver over 7,000 affordable homes ►► ►Completed, on average, 96% of dwellings on brownfield land ►► ►Built, on average, 95% of sites within 500 metres of a transport node Despite difficult economic conditions, Berkeley has invested heavily in land and construction. Performance over the last three years has been strong, with the number of new homes delivered to the market more than doubling to 3,565 between 2009 and 2012. This represents 8% of all new homes built in London and the South East.13 Berkeley established the UK’s first Private Rental Fund with the Home and Communities Agency in 2010. This private rental initiative shows how the public and private sector can work together to mitigate challenges faced in the housing market. The fund is currently valued at £200m and consists of almost 900 homes across 27 Berkeley developments. The strategic importance of the Private Rental Sector to the UK has been explicitly recognised by the Government, in that it “fulfils a vital economic and social role, offering households choice and flexibility in meeting their housing needs, whether for the short or the long-term.”14

Chart 1: Homes delivered by year

4,000 120

3,500 100

3,000 I n d s e

e 80 x

m 2,500 ( o 2 h 0

f 0 o

2,000 60 8

= r 1 e b 0

1,500 0 m ) u 40 N 1,000 20 500

0 0 2008 2009 2010 2011 2012

Berkeley number of homes Berkeley Index UK Index

The Berkeley Group Economic Impact Assessment 5 Case study – Gunwharf Quays

6 The Berkeley Group Economic Impact Assessment 6 million annual visitors to Gunwharf Quays

The £200m15 redevelopment of Gunwharf Quays has transformed Over half of Gunwharf Quays is public space. The development a redundant Royal Naval dockyard into a thriving new community hosts up to 50 events a year, including concerts, carnivals and visitor destination. Gunwharf now comprises 757 homes and themed days. Major tourist events have also been held at and, as a retail and leisure destination, attracts approximately six Gunwharf Quays, including a Golden Jubilee visit by HM The million visitors per year. Queen, The Tall Ships Race and the EDS Atlantic Challenge Race. Gunwharf was the main ordnance yard for the Royal Navy from its The development encourages visitors to arrive by means other inception in the 17th Century until 1986 when it was closed and than car by providing bicycle storage and a pedestrian walkway to the site was made redundant. Portsmouth City Council issued a the main bus and coach terminus. Additionally, funding given to development brief in 1995 and the 32 acre site was acquired by the council has improved several road junctions and well-known Berkeley in 1997. accident hot-spots.

Construction began in 1999 and the first residents moved in Gunwharf contributed £1.9m of council tax19 to the public purse during 2002. By 2008, the site had been transformed around in 2012. The development has also helped Portsmouth gain Single a new marina with over 90 shops, 23 bars and restaurants, a Regeneration Budget (SRB) funding of £78m20 which has been cinema, a bowling complex, a hotel and office space. Retailers used to deliver education, employment, youth business support, include Boots, Marks & Spencer, Barbour and Gap. The Spinnaker training, early years and community project benefits. Tower, which rises 170 metres above sea level, has created a new Gunwharf Quays has received a number of awards, including the landmark for Portsmouth. British Urban Regeneration Association (BURA) Award 2003 Gunwharf has also been the catalyst for significant regeneration for Best Practice in Regeneration and the English Partnership and development in the Portsea and wider Portsmouth area, Award for Partnership in Regeneration, recognising Berkeley’s including the former Queen’s Street Car Park which is now 566 partnership with Portsmouth City Council. apartments, and a 22 storey high landmark tower.

An independent report commissioned by the British Property Table 1: Gunwharf Quays’ facts and figures Federation16 found that Gunwharf has delivered significant employment benefits to the local community: Key statistics Number of acres regenerated 32 ►► Site preparation and delivery provided more than 500 full time jobs in construction at its peak, with much of the work going to Total investment £200m local companies.17 Number of homes built 757 ►► The completed development has generated in excess of 2,500 new jobs in the local area, including 1,650 direct jobs in retail, Affordable homes 126 leisure and offices on the development itself and approximately Retail space 235,000 ft2 900 other indirect jobs in the local area. Leisure space 217,000 ft2 ►► 460 of these jobs were taken by unemployed people in the Office Space 27,000 ft2 local area.18 Jobs on site 1,650

Total jobs supported (on-site and off-site) 2,500

Source: Data on the Gunwharf Quays development provided by Berkeley and The College of Estate Management, Mixed Use Urban Regeneration at Brindleyplace, Birmingham and Gunwharf Quays, Portsmouth, 2003

The Berkeley Group Economic Impact Assessment 7 Berkeley’s economic impacts

Introduction Direct, Indirect and Induced effect Berkeley contributes directly to the UK’s GDP through the Gross The full benefits Berkeley generates for the UK economy can Value Added (GVA) it produces; it creates jobs and contributes to be estimated by calculating the Direct, Indirect and Induced public finances through taxes. effects, as defined below:

In addition to this, Berkeley generates further demand for ►► The Direct Effect of Berkeley’s activity, i.e., its contribution businesses throughout the UK through the supply chain and the to the UK’s Gross Domestic Product and the jobs it creates. wages paid to employees. This in turn creates additional GDP, ► The Indirect Effect arising from Berkeley’s demand for supports jobs and contributes to the public purse through taxes. ► goods and services along the supply chain. In the following sections we present our estimate of these effects. ► The Induced Effect of Berkeley’s and its suppliers’ Our results are based on the methodology described in Appendix C. ► employees spending a share of their income on the consumption of goods and services in the wider economy. Berkeley also generates significant contributions to the UK economy through inward investment, affordable housing provision and contributions towards a broad range of facilities and services for local communities.

375 Kensington High Street

8 The Berkeley Group Economic Impact Assessment £2.6bn Berkeley’s contribution to economic activity in 2012

Contribution to the UK economy In 2012, Berkeley directly or indirectly supported over £2.6bn of Table 3 shows the evolution of Berkeley’s contribution to GDP over economic activity in the UK; a 25% increase over the previous year. the last five years.

Table 2: Contribution to Economic Activity in (£m), by year Table 3: Contribution to Gross Domestic Product (£m), by year 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Total 2,379 1,418 1,866 2,091 2,613 Total 906 481 713 906 1,046 Direct 1,018 645 637 1,027 1,236 Direct 327 151 185 450 457 Indirect 1,044 583 951 808 1,046 Indirect 441 247 406 344 444 Induced 317 190 278 256 331 Induced 138 83 122 112 145

Source: Ernst & Young’s calculations based on Annual Reports 2008-2012 published Chart 2: Contribution to Gross Domestic Product by the Berkeley Group Holdings plc and data on purchases and other operational 1,200 costs provided by Berkeley This translates into a contribution to Gross Domestic Product 1,000 worth over £1bn; a 16% increase over 2011 which was a previous 800 record year for Berkeley (£906m). This is particularly impressive Induced considering that over the same period the UK’s GDP fell by over 600 Indirect 21 £ million half a percentage point (-0.51% ). Direct 400 The largest share is accounted for by Berkeley’s direct contribution to GDP, which in 2012 was £457m; 44% of the total. 200

An additional £444m came from the Gross Value Added generated 0 by Berkeley’s contractors and the supply chain (42%), and a 2008 2009 2010 2011 2012 further £145m (14%) from the additional induced consumption of employees. Source: Ernst & Young’s calculations based on Annual Reports 2008-2012 published by the Berkeley Group Holdings plc and data on purchases and other operational costs provided by Berkeley Contribution to GDP only tells part of the story. Berkeley’s land purchases – over £1.3 billion over the last five years – inject cash that can be reinvested back into the UK economy. Approximately £200m of this land was acquired from the public sector. This not only helps to support the Government’s objective of delivering new homes on surplus public land but also generates crucial funding for the public purse at a time of fiscal consolidation and budgetary constraints.

Cafe Rouge, Gunwharf Quays

The Berkeley Group Economic Impact Assessment 9 4.5 total number of jobs created per home built

Contribution to employment Berkeley directly or indirectly supported approximately 16,000 Berkeley offers a range of employment opportunities across the jobs in the UK (2012). whole construction and development spectrum. It also recognises the importance that training schemes provide for getting young The majority of jobs (8,668 in 2012, 54% of the total) are directly people in particular into work. dependent on Berkeley’s activity, being either its own employees (1,221)22 or contractors’ employees working on Berkeley’s ►► The graduate scheme currently employs 86 recent graduates construction sites (7,447).23 with relevant qualifications in quantity surveying, construction, town planning, architecture, marketing, customer services, The remaining 46% is split between the rest of Berkeley’s supply health and safety, or related disciplines. chain (4,431) and the wider economy (2,854).24

Chart 3: Contribution to employment ►► Berkeley provided 115 full time apprenticeships during 2012.

18,000 ►► The Berkeley Sales Academy was formed in 2012, to provide

16,000 structured training for junior sales consultants.

14,000

12,000 Induced 10,000 Other Indirect 8,000 Number of jobs Contractors 6,000 Direct

4,000

2,000

0 2008 2009 2010 2011 2012

Source: Ernst & Young’s calculations based on employment records provided by Berkeley and data on purchases and other operational costs provided by Berkeley Typical jobs created range from architects to construction workers and from structural engineers to plumbers.

Table 4: Number of new jobs created by Berkeley per home built

Number of new jobs

Jobs at Berkeley 0.3

Contractors’ jobs on site 2.1

Jobs along the supply chain 1.2

Induced jobs supported by employees’ 0.8 additional consumption

Total number of new jobs created 4.5

Note: Differences in totals due to rounding. Source: Ernst & Young’s calculations based on employment records provided by Berkeley and data on purchases and other operational costs provided by Berkeley.

10 The Berkeley Group Economic Impact Assessment Royal Arsenal Riverside The Berkeley Group Economic Impact Assessment 11 Case study – Chelsea Bridge Wharf

12 The Berkeley Group Economic Impact Assessment £587m the economic activity generated through the construction of Chelsea Bridge Wharf

Chelsea Bridge Wharf is a mixed use brownfield regeneration Table 6: Breakdown of additional economic activity across the supply chain scheme in central London. It comprises 1,128 homes, 330 (29%) Sector Economic activity (£m) % of total of which are affordable housing, 186,000 ft2 of commercial space, Construction 193 33% including a four-star hotel and spa, offices, retail and health and Manufacturing 263 45% leisure facilities as well as 2.6 acres of public space. Services 119 20% The site is located on the south bank of the Thames adjacent to Real Estate 12 2% Chelsea Bridge. Originally warehousing, the site had been used as Total 587 100% a car pound for the last 30 years before Berkeley purchased it in Source: Ernst & Young’s analysis based on data on purchases provided by Berkeley 2000 with an initial investment of £54m.25 We estimate that the development generated a total of £214m Table 5: Chelsea Bridge Wharf facts and figures in additional Gross Value Added in the UK economy, supporting Key statistics 3,415 jobs. Total investment £252m Number of homes built 1,128 Geographic spread of benefits The map below shows the geographic distribution of Berkeley’s direct Affordable homes 330 investment on Chelsea Bridge Wharf. Although the scheme is in central Commercial space 186,000 ft2 London, the benefits of its development were felt across the UK. Total amount of economic activity generated £587m Map 1: Geographic distribution of direct investment on Chelsea Bridge Wharf Multiplier effect of £1 invested by Berkeley 2.33 Additional Gross Value Added £214m Total jobs supported (on-site and off-site) 3,415

Source: Ernst & Young’s analysis based on data on purchases provided by Berkeley

The supply chain Scotland Berkeley invested approximately £252m in the regeneration of Chelsea Bridge Wharf, mainly on construction activities and intermediate manufacturing goods. Northern By mapping the indirect and induced effect of Berkeley’s spend Ireland North on Chelsea Bridge Wharf, we estimate that the total amount West of economic activity generated throughout the UK as a direct consequence of the project has been £587m. East Midlands West This means that for every £1 invested by Berkeley on the Midlands East regeneration of Chelsea Bridge Wharf, £2.33 worth of economic London activity was created across the UK. This is more than 4% larger than the average multiplier effect for all UK sectors.26 South East Table 6 shows the industry split of the additional economic activity generated by the regeneration project at Chelsea Bridge Source: Ernst & Young’s analysis based on data on purchases provided by Berkeley Wharf. 45% (£263m) was on manufacturing goods (e.g., building materials, furnishings); approximately one third (£193m) on For example, a small enterprise, Red Architectural Ltd, in the construction activities (e.g., building and construction work); with North West of England, supplied over 96% of the brick and block the remaining £131m on services. work for the construction of Chelsea Bridge Wharf, worth a total of almost £20m; the majority of carpets and external cladding An additional £335m worth of economic activity is estimated to were supplied by companies in the West Midlands; staircases and have been generated throughout the UK through the indirect and concrete frames by companies in the East of England; plumbing induced effect of Berkeley’s investment in Chelsea Bridge Wharf. and electrical installation by a small company in the East Midlands.

The Berkeley Group Economic Impact Assessment 13 £1.1bn Berkeley’s direct and indirect contribution to HMT between 2008 and 2012

Contribution to public finances Financial benefits to local authorities Berkeley’s developments have also generated significant Over the last five years Berkeley’s activity, directly or indirectly, revenues for local authorities through council tax and the has contributed almost £1bn, or an average of £195m per year, to New Homes Bonus. Her Majesty’s Treasury (HMT) (£977m).

Table 7: Contribution to Treasury (£m) We estimate that residents of Berkeley developments that were delivered between 2008 and 2012 have paid over £41m in Council 2008 2009 2010 2011 2012 Total Tax, an average of £8m per year. £25m of this was in London Total 220 154 165 189 248 977 (61%), £15m in the South East (37%), and the remaining £1m split Corporation between the West Midlands and the East of England. Tax 74 44 47 56 75 296 Table 9: Total Council Tax payments from 2007/08 to 2011/12 (£) Employee PAYE 68 54 55 57 79 312 Total Annual Council Tax payments (£m) National London 25 Insurance 68 52 53 61 82 316 South East 15 SDLT 10 4 10 15 13 53 Other 1 Annual average 195.4 Total 41

Note: Differences in totals due to rounding. Annual Average 8.2 Source: Ernst & Young’s calculations based on Annual Reports 2008-2012 published Source: Ernst & Young’s calculations based on Council Tax Bands and new homes by the Berkeley Group Holdings plc and data on purchases other operational costs delivery data provided by Berkeley and tax returns provided by Berkeley If SDLT paid by residents over the same period is added then the The Government introduced the New Homes Bonus scheme in total contribution to HMT resulting from Berkeley’s activity can be February 2011 as an incentive to increase housing delivery. For estimated to reach almost £1.1bn. each new home delivered from October 2010 the council receives the national average council tax for six years. Affordable homes Table 8: SDLT paid by Berkeley residents (£m) get a further £350 each year.27 2008 2009 2010 2011 2012 Total We estimate that Berkeley’s developments have generated Total 9 17 24 25 34 109 £32m for local authorities from the New Homes Bonus since the Annual average 21.8 scheme began.

Source: Ernst & Young’s analysis based on data provided by Berkeley Table 10: Total value of New Homes Bonus to councils New Homes Bonus (£m) London 17 South East 13 Other 2 Total 32

Source: Ernst & Young’s calculations based on NHB and new homes delivery data provided by Berkeley

14 The Berkeley Group Economic Impact Assessment £1.9bn the amount of international investment attracted to the UK by Berkeley

Inward investment to the UK Berkeley also contributes to the UK economy through the sale of its homes to international buyers. Over the period 2008-2012 Berkeley’s international sales have amounted to £1.9bn or £374m per year on average. This equates to nearly £2bn of new capital entering the UK directly through Berkeley’s activity. By apportioning international sales to Berkeley’s total sales, we estimate that international sales have:

►► Contributed £388m to HMT between 2008 and 2012 ►► Generated £16m for local authorities through Council Tax between 2008 and 2012

►► Supported 6,300 UK jobs in 2012 ►► Contributed £97m to S106 interventions between 2008 and 2012 (commitments)

►► Funded the provision of almost 2,800 affordable homes between 2008 and 2012 (commitments) International investment can often be the difference that makes development viable by supporting cash flow early on. It underpins the provision of public amenities and affordable housing, creates jobs and generates significant revenue for the Exchequer.

Construction of Crossrail

The Berkeley Group Economic Impact Assessment 15 £49 million Berkeley’s annual S106 contributions (commitments, average 2008-2012)

Development benefits Beyond the benefit of creating new homes, offices and retail space, Berkeley developments make significant contributions to the UK’s affordable housing provision and other planning gain. Berkeley has funded a broad range of facilities and services, including healthcare, sports and leisure facilities, transport improvements and employment and training, which mitigate the impacts of their developments and provide public spaces, amenities and a range of services to local communities. Over the last five financial years, Berkeley has made S106 contributions of £245m; an average of £49m each year. Examples of Berkeley’s contributions include the Crossrail station box at Royal Arsenal and Imperial Wharf train station. Berkeley’s S106 commitments include a total contribution of £47m to education and training on 50 developments; an average of £9m each year.

Table 11: Section 106 Contributions by type and region, commitments signed between 2007/08 – 2011/12

Transport Contributions Sports, and highway to offsite community, Education improvements affordable Public art healthcare and Total Region (£m) (£m) housing (£m) (£m) other (£m) (£m) London 38 38 11 1 108 196 Imperial Wharf South East 3 16 - - 23 42 Other 7 - - 1 - 8 Total 47 54 11 2 131 245 Annual average 9.4 10.8 2.2 0.4 26.2 49

Note: Differences in totals due to rounding. Source: Ernst & Young’s analysis based on Section 106 Commitments data provided by Berkeley. Differences in totals due to rounding.

Beaufort Park

16 The Berkeley Group Economic Impact Assessment 7,000 the number of affordable homes provided by Berkeley (commitments, 2008-2012)

Over the same period Berkeley has also provided 83 acres of public space, an average of 16.6 acres a year, including a seven acre park at Imperial Wharf, Thames riverside walkways and the restoration of gardens and pleasure grounds at Roehampton House, a Grade I listed building.

Table 12: Public Realm by Region, commitments signed between 2007/08 – 2011/12

Region Public Realm (Acres) London 38 South East 45 Other - Total 83 Annual average 16.6

Source: Ernst & Young’s analysis based on Section 106 Commitments data provided by Berkeley. Public Realm acres for “Other” equal to 0.1.

Affordable housing Berkeley is a major contributor to affordable housing provision in London and the South East. Over the last five financial years, Berkeley has signed over 7,000 commitments to provide affordable homes; an average of over 1,400 commitments per year. These Kidbrooke Village include social rent, shared equity, shared ownership and extra care homes for the elderly. Berkeley accounted for approximately 16% of affordable housing commitments in London between 2008 and 2010. This rose to 23% in 2011.28

Table 13: Affordable Homes by type and region, commitments signed between 2007/08 – 2011/2012 Affordable shared Discounted Other Region ownership market sale Extra care affordable Total London 2,210 604 250 2,128 5,192 South East 284 131 138 1,028 1,581 Other - 99 137 - 236 Total 2,494 834 525 3,156 7,009 Annual average 499 167 105 631 1,402

Source: Ernst & Young’s analysis based on Section 106 Commitments data provided by Berkeley

Local expenditure In addition to the direct benefits to local communities described in the previous sections, further benefits derive from the consumption of goods and services by the residents and tenants on Berkeley’s developments, supporting business in the local area. We estimate that between 2008 and 2012, the additional local spend generated by Berkeley residents was £198m. This is equivalent to 768 additional full time jobs created 29 Imperial Wharf in their local communities.

The Berkeley Group Economic Impact Assessment 17 1,027 the total number of senior living homes under development by Berkeley

Senior living homes Senior living developments provide homes for older adults looking to live in an environment with residents of a similar age. A number of communal facilities are available on site, such as restaurants, activities rooms and hairdressers.

Table 14: Senior Living Homes

Number of senior Senior living development living homes Complete Olive House, 55 Imperial Wharf Kingshill, Cirencester 60 Victory Pier, Gillingham 60 Under Kidbrooke, Greenwich 170 construction Royal Arsenal Riverside, 165 Woolwich King Harry Lane, St Albans 28 Marine Wharf, Lewisham 78 Delancey, Cheltenham 49 Yarnton, Oxfordshire 52

Planning 195 Warwick Road, 89 permission Kensington In planning Kent & Sussex Hospital, 43 Tunbridge Wells Bersted Park, 71 North Bersted West of Horsham, 107 West Sussex Total 1,027

Source: Berkeley Group Evidence to the All Party Parliamentary Group on Housing and Care for Older People, Tony Pidgley, October 2012

Dial Arch, Woolwich Arsenal

18 The Berkeley Group Economic Impact Assessment Jazz Festival, Imperial Wharf The Berkeley Group Economic Impact Assessment 19 4.68 the average decrease in the deprivation index of the five areas with Berkeley developments considered (IMD 2007-2010)

Analysis of Indices of Multiple Deprivation We have compared the Indices of Multiple Deprivation (IMD) of five areas in which Berkeley developments have been recently completed (or partly completed), to illustrate the positive effects that residential and mixed use developments have on communities. As shown in the chart below, all five areas where Berkeley developments are present have outperformed their neighbouring wards in the most recent survey period (2007‑2010). The improvement is particularly evident for those areas where deprivation was more pervasive (Haringey, Ealing and Greenwich). The IMD measures social and economic deprivation, therefore, a negative change represents an improvement in an area’s conditions.

Indices of Multiple Deprivation Analysis 4.0 2.2 2.0 1.0 0.6 0.0 -0.1 -0.6 -2.0 -1.1 -1.8 Ward -4.0 -4.2 Borough -6.0

-8.0

-8.9 -10.0 -10.3 -12.0 Berkeley Berkeley St George St James Oxford Bromyard Royal Arsenal Imperial New River Waterways, Avenue, Riverside, Wharf, Village, Lucy Foundry Acton Woolwich Fulham Hornsey

Source: Ernst & Young’s analysis based on: DCLG, English indices of deprivation 2007 and 2010

The IMD developed by the Department for Communities and Local Government (DCLG) is a composite measure combining a number of indicators that cover a range of economic, social and housing issues, into a single score. This allows areas to be ranked relative to each other according to their level of deprivation. The IMD has been produced for the 32,482 Lower Super Output Areas in England for the years 2004, 2007 and 2010. Street Elite Festival, Wandsworth

20 The Berkeley Group Economic Impact Assessment £2 million the amount invested by the Berkeley Foundation in over 40 charities since March 2011

The Berkeley Foundation The Berkeley Foundation was launched in March 2011. It works to improve the lives of young people and their communities in London and the South East of England. To date, the Foundation has invested over £2m30 in more than 40 separate charities. Approximately 70% of funding from The Berkeley Foundation has been committed through grants or strategic partnerships, with 21% to designated charities and 8% to sponsorship.

Funding distribution

8% Grants and donations

35% Designated charities Strategic partnerships

36% Sponsorships

21%

Two strategic partnerships were launched in 2011. The first was with The Lord’s Taverners, developing a sports-based training for work programme called Street Elite. The second was with Shelter, supporting a comprehensive range of housing advice services for young people.

So far, the Berkeley Foundation has helped Shelter support 65,34831 people through a telephone helpline, individual advice face to face from an expert housing advisor and web-based services. The Street Elite programme worked with a cohort of 24 disengaged young people who were not in education, employment or training (NEET) during its first year. Nineteen of these completed the programme and are now in work or training, at a unit cost of £4,41132 per person. For comparison, data from the New Economics Foundation33 suggests that jailing one young offender costs the UK taxpayer up to £140,000 a year. Street Elite is now doubling in size and working with 48 young people in the second year of the programme. A report by The Work Foundation and The Private Equity Foundation34 found that a young NEET costs the economy £56,000 over the course of their lifetime. Therefore, by training these young people, the Berkeley Foundation could save the economy £2.7m at a cost of only £212,000. In total, 15% of all employees have signed up to Give As You Earn, helping Berkeley achieve the gold Payroll Giving Quality Mark Award, and 60% of employees invested time or money in the Berkeley Foundation during its first year of operation.

The Berkeley Group Economic Impact Assessment 21 Case study – Royal Arsenal Riverside

22 The Berkeley Group Economic Impact Assessment 12,400 the total number of jobs supported by the Royal Arsenal Riverside development

Royal Arsenal Riverside in Woolwich is one of London’s largest Table 16: Royal Arsenal Riverside economic benefits brownfield regeneration sites. Formerly used for the manufacture Contributions to the UK Economy of military equipment by the Ministry of Defence, the site was acquired by Berkeley in 2001 from the London Borough of Total economic activity generated £2bn Greenwich and the London Development Agency for a total Contribution to GDP £780m investment of £43 million. Total jobs supported (on-site and off-site) 12,400 Development of Royal Arsenal will take up to 30 years and £1bn of investment to complete. To date, 1,988 homes have been Total council tax payments from 2010 to 2012 £2.4m delivered, 610 (31%) of which are affordable homes, and 21 listed Source: Royal Arsenal Riverside, SE18 document from Berkeley, Ernst & Young’s buildings have been refurbished. analysis based on data provided by Berkeley

The site also comprises 3.5 acres of public space and 300,000ft2 of commercial space, including a gym, hotel, shops, a museum, Although the scheme is located in London, the benefits of its a pub and cafes. The development includes a district heating development are felt across the UK. network supplied by a low-carbon combined heat and power plant. Table 15: Geographic spread of benefits Table 15: Royal Arsenal Riverside facts and figures

Key statistics

Size of regenerated area 76 acres

Total investment for the entire scheme £878m

Total number of new homes when complete 4,960 Scotland

Total number of Affordable homes when complete 1,238

Total number of Extra Care homes when complete 165 Northern Commercial space 300,000 ft2 Ireland North West Public park 3.5 acres

Source: Royal Arsenal Riverside, SE18 document from Berkeley, Ernst & Young’s East analysis based on data provided by Berkeley West Midlands Midlands East Wales Royal Arsenal is a good example of the potential economic benefits London delivered through the construction of housing developments. South We have estimated that the £878m investment in the development East could generate almost £2bn worth of economic activity throughout the UK. This means that for every £1 invested by Berkeley £2.22 worth of economic activity is created. Source: Ernst & Young’s analysis based on data on purchases provided by Berkeley

The Berkeley Group Economic Impact Assessment 23 £15.4m the amount of S106 contributions from the Royal Arsenal Riverside development (commitments)

The regeneration of Royal Arsenal has contributed a wide range of new facilities and services to the local community through S106 commitments worth over £15.4m. Development benefits to the local community include:

►► A £2.5 million financial contribution to support primary school places and a local library ►► £700k of healthcare contributions and the provision of a new local health centre ►► Improvement works to the local road system ►► The provision of a Thames riverside pier to link Woolwich to the Thames Clipper Boat service ►► The funding and construction of a new Crossrail station box which will be delivered by mid‑2013 Chart 4: Royal Arsenal Riverside Section 106 contributions by type (commitments)

Sports, community, Education: healthcare and £ 2.8m other: £3.2m Public Art: £0.1m

Transport and highway improvements: £3.2m Miscellaneous S106 contributions: £6m

Source: Ernst & Young’s analysis based on Section 106 Commitments data provided by Berkeley The Ward of Greenwich has also experienced a significant improvement as measured by the Index of Multiple Deprivation (IMD) – as illustrated in Chart 5. A negative change in the IMD represents a decrease in the level of deprivation in an area.

Chart 5: Indices of Multiple Deprivation Analysis

4 2.53 2

e -1.8 g

n -2.5 a

h 4 Borough C

D Ward M I 6

10 -10.2 12 2004-07 2007-10

Source: Ernst & Young’s analysis based on: DCLG, English indices of deprivation 2007 and 2010

24 The Berkeley Group Economic Impact Assessment Royal Arsenal

The Berkeley Group Economic Impact Assessment 25 Final remarks

“There’s only one way out of this housing crisis: we have to build our way out” Nick Clegg, NHBC’s Annual Lunch 2012

The housing sector plays a critical role in the growth of the UK Berkeley, through the provision of new homes, can play a economy through its contribution to economic output, job creation significant role in supporting the nation’s growth agenda. and the generation of significant tax proceeds. However, the Berkeley delivered 3,565 homes in 2012, representing 8% of housing market is currently facing both cyclical and structural all new homes built in London and the South East of England. challenges. The recent slump in housing activity accounted for It directly or indirectly supported over £2.6bn of economic around a third of the overall 6% drop in GDP over the 2008-09 activity in the UK in 2012, which translates into a contribution recession35 and housing transactions are expected to fall to their to Gross Domestic Product worth over £1bn and the creation of lowest levels this autumn since 1990.36 16,000 jobs. At the same time, the chronic undersupply of new housing creates a long-term structural problem. The mismatch between supply The delivery of new homes provides significant economic and demand has severely worsened since the economic downturn benefits to local communities. in 2007 and has been a major factor in the significant volatility of Over the last five financial years Berkeley has made significant housing prices which, in turn, has implications for the long-term contributions to local communities through Section 106 affordability of housing in the UK. As a consequence, the average commitments. These include the delivery of over 7,000 affordable age of first time buyers increased from 33 to 36 years old between homes and £245m of investment in public infrastructure, 37 2005 and 2009. education and community facilities and services. Moreover, its This is particularly important in London where more than half residents can be estimated to have spent almost £200m in their of all households now live in rented accommodation. The cost of local communities over the same period, supporting almost 800 privately renting a home has risen by 37% in the past five years, local jobs. and is set to increase a further 35% over the next six years.38 The shortage of homes and rising rents also has implications International investment underpins the provision of for public finances with the annual Housing Benefit bill reaching these benefits and is often the driver that makes a £23bn in 2012.39 development viable. The Government’s growth agenda recognises that housing Berkeley is a major attractor of inward investment to the UK. delivery is important not only in its own right but also because Over the period 2008-2012, Berkeley’s international sales have of the contribution it makes to economic growth and to reducing amounted to almost £2bn. These alone have funded the provision unemployment, particularly for the young and unskilled workforce. of 2,800 affordable homes and of £78m worth of investment in Moreover, as it promotes labour mobility and ensures a better local communities (S106). They also contribute £279m per annum matching of workers with employment opportunities, it increases to the Exchequer; and support over 3,500 UK jobs (2012). the overall efficiency of the economy.

26 The Berkeley Group Economic Impact Assessment Appendices

Imperial Wharf Appendix A Timeline

Year Event 1976 Berkeley Homes is established in Weybridge, Surrey by Tony Pidgley and Jim Farrer

1984 Berkeley lists on the LSE

1985 St George Plc is established as a Joint Venture between Berkeley and Speyhawk

1996 St James Homes is established as a Joint Venture between Thames Water and Berkeley

2005 Berkeley disposes of Crosby Homes division to focus on its core London and the South East of England markets

2006 St Edward Homes established as a Joint Venture with the Prudential plc

2008 The Berkeley Group is granted The Queen’s Award for Enterprise: Sustainable Development

2010 Berkeley launches Vision2020, a plan for the business to become one of Britain’s most successful and sustainable companies by 2020. Berkeley establishes the UK’s first Private Rental Fund with the Homes and Communities Agency

2011 Berkeley is voted Britain’s Most Admired Company 2011 The Berkeley Foundation is launched to improve the lives of young people and their communities in London and the South-East of England

2012 Berkeley awarded “Large House builder of the Year” at the inaugural RESI Awards and ranked Britain’s most sustainable major house builder by the Next Generation benchmark for the seventh consecutive year

28 The Berkeley Group Economic Impact Assessment Appendix B Glossary

Affordable Housing: includes social rented and intermediate housing, provided to specified eligible households whose needs are not met by the market1. Give As You Earn (G.A.Y.E): is a scheme that enables anyone receiving pay that is subject to PAYE deductions, to donate to any charity or religious organisation from their gross pay. Payments are deducted from a donor’s pay before tax is deducted. This means that employees are given tax relief on their donation immediately, at their highest rate of tax2. Gross Domestic Product (GDP): provides a measure of the total economic activity in a country. It can be measured using income, expenditure or output3. GDP is often referred to as one of the main ‘summary indicators’ of economic activity and references to ‘growth in the economy’ invariably refer to the growth in GDP during the latest quarter4. Gross Value Added (GVA): is a measure of the value of goods and services produced in the economy and can be defined as outputs less the cost of raw materials and other inputs used up in production (intermediate consumption), i.e., the value added by any unit engaged in production. This is calculated gross of any deductions for depreciation or consumption of fixed capital.5 Index of Multiple Deprivation (IMD): a composite measure combining a number of indicators that cover a range of economic, social and housing issues into a single score6. Lower Super Output Area (LSOA): is a small geographic area in England and Wales. It is designed to improve the reporting of small area statistics and there is a LSOA for each postcode in England and Wales.7 Not in education, employment or training (NEET): a young person who has left full time education and is not working or training. New Homes Bonus (NHB): is a grant to local councils for increasing the number of homes and their use. It is paid each year for six years and is based on the amount of extra Council Tax raised for new build homes, conversions and long-term empty homes brought back into use. There is also an extra payment for providing affordable homes8. S106 (Section 106): legally binding agreements under the Planning Act, containing obligations either in cash or kind, to undertake works, provide affordable housing or provide additional funding for services as part of a developer’s planning obligations Stamp Duty Land Tax (SDLT): is a tax payable on the purchase or transfer of property or land in the UK where the amount paid is above a certain threshold9. Standard Assessment Procedure (SAP): the Department of Energy and Climate Change’s (DECC) methodology for assessing and comparing the energy and environmental performance of dwellings. Its purpose is to provide accurate and reliable assessments of dwelling energy performances that are needed to underpin energy and environmental policy initiatives10.

1 CLG Planning Policy Statement 3: Housing, Annex B, Definition of Affordable Housing, November 2006 2 HMRC: Payroll Giving: introduction for employers and pension providers 3 ONS Glossary 4 ONS: Gross Domestic Product Preliminary Estimate, Q3 2012, 25 October 2012 5 Ibid 6 Ibid 7 Data Dictionary, NHS 8 DCLG 9 HMRC 10 DECC

The Berkeley Group Economic Impact Assessment 29 Appendix C Economic Impact Assessment Methodology

Economic activities are related to one another within the wider Direct effect economy through a dense network of supplier-customer relations, Berkeley’s productive activity contributes directly to the UK’s and thus produce effects that cross corporate and sector borders. economic activity; it contributes to the Country’s GDP through the Each unit of output produced in a specific sector of the economy Gross Value Added it creates; and it supports jobs. requires the production of additional units of goods and services in Berkeley’s direct contribution to the UK’s Gross Domestic other parts of the economy to fulfil its input requirements. Product is the Gross Value Added it generates in the course of its Production of an additional unit of any good or service also productive activity. This has been calculated by subtracting the requires the application of additional amounts of labour. costs of goods and services purchased by Berkeley in the course of its activity from the total value of production, i.e., the sum of sales Therefore, any increase in the demand for goods and services in and the year-on-year difference in work-in-progress. the economy will trigger yet more demand for other goods and services, to fulfil the input needs described above. The data for the computation of Berkeley’s GVA has been obtained from the Group’s Consolidated Income Statement and Financial The amount of labour as well as the quantity and type of goods Statements, integrated with Berkeley’s accounting and Human and services necessary to produce an additional unit of output is Resources records. industry-specific and depends on the technology used. Berkeley’s direct employment has been measured by headcount as The Input-Output model developed by Wassily Leontiev describes reported in the Human Resources records. such relationships and allows quantifying such additional demand for labour, goods and services through the computation of Berkeley’s direct contribution to Government Revenue has been industry-specific multipliers. calculated from Berkeley’s tax returns, and it includes Corporate Income Tax (CIT); employment-related taxes: Income Tax (IT) and Using the Input-Output model as its main building block, the National Insurance (NI); Stamp duty Land Tax (SDLT); Council Tax; Economic Impact Assessment methodology allows quantifying a and Business Rates. productive activity’s total contribution to the wider economy. Within this framework, three distinct effects can be identified Indirect effect and measured: Berkeley’s activity generates additional demand for the factors of 1. A Direct effect arising from the initial increase in economic production at the national level through the commissions it grants activity, the GVA it generates and the additional jobs it creates. to its contractors and the domestic component of its supply chain. 2. An Indirect effect arising from the additional demand of goods Through its purchase of goods and services, Berkeley supports the and services along an industry’s supply chain. businesses that supply such goods and services. These businesses 3. An Induced effect arising as an effect of households spending a in turn generate additional economic output, Gross Value Added share of the additional income generated through the provision and employment; and in turn generate additional demand for of labour on the consumption of goods and services. goods and services along their supply chain. A comprehensive assessment of Berkeley’s contribution to the Berkeley’s purchases have been measured directly from the UK economy has been produced, using an Economic Impact Group’s purchase records. These enter the calculation of Assessment methodology. Berkeley’s indirect output directly. The additional effect of the suppliers’ own supply chain has been estimated using Type I The Economic Impact Assessment quantifies the effect of multipliers obtained from Input-Output tables. Berkeley’s activity on three key economic variables: The indirect effect on GDP has been calculated through the 1. Gross Domestic Product application of GVA/Output ratios to the indirect Output thus 2. Employment obtained. GVA/Output ratios can be calculated at the industry level from official data from the Office of National Statistics (ONS). 3. Government Revenue

30 The Berkeley Group Economic Impact Assessment The indirect effect on employment has been calculated in two steps: in the first place, contractors’ employment on Berkeley’s sites has been extracted directly from their records, as provided by Berkeley. The additional indirect employment creation has been calculated by applying a measure of apparent labour productivity (GVA/employee) to the residual part of indirect GVA, after subtracting the GVA generated by Berkeley’s contractors themselves. Apparent productivity of labour can be calculated from statistical data produced by ONS at the industry level. Total tax revenue has been calculated as the sum of Corporate Income Tax (CIT), employees’ Income Tax (IT) and National Insurance (NI). These have been estimated using data from Her Majesty’s Revenue & Customs (HMRC) and ONS.

Induced effect As household disposable income increases due to the increased provision of labour services, so does their spending, as determined by their Marginal Propensity to Consume (MPC). Household spending in turn generates economic activity within the economy to satisfy the additional demand for goods and services. The increase in consumption of local goods resulting from the induced effect can be computed by multiplying the additional household disposable income by the Marginal Propensity to Consume, adjusted by the ratio of imports to local production at the product level. Marginal Propensity to Consume, import ratios and household consumption patterns will be obtained from the ONS.

Multiplier calculations Output multipliers are obtained from Input-Output tables, through a mathematical process known as Leontiev Inverse. Input-Output tables are readily available for the UK from the ONS. By applying industry GVA/Output ratios and apparent labour productivity measures to the Output multipliers thus obtained, industry level GVA multipliers and employment multipliers will be produced. GVA/Output ratios and apparent labour productivity measures are obtainable from statistical data published by the ONS.

The Berkeley Group Economic Impact Assessment 31 Appendix D References

1. Berkeley’s financial years run from April to March, hence the period covered in this report extends from April 2007 to March 2012 2. London Stock Exchange 3. The Berkeley Group Holdings plc consolidated income statement 2012 4. DCLG: Household projections 2008 to 2033, England. 26 November 2010 5. DCLG: House Building: June Quarter 2012, England. 16 August 2012 6. National Housing and Planning Advice Unit: Housing Supply and Planning Controls: the impact of planning control processing times on housing supply in England, February 2010 7. HMRC: Residential and non-residential UK Property Transactions Count (Monthly, Quarterly and Annual Tables) 8. HM Treasury & BIS: The Plan for Growth, March 2011 9. HMRC receipts 2012 10. DCLG: Receipts of council tax in England 2002-03 to 2011-12. 27 June 2012 11. Ernst & Young’s Analysis based on Section 106 data provided by Berkeley 12. Ibid 13. DCLG: House Building Tables: June Quarter 2012, England, the UK and constituent countries 14. Investment in the UK private rented sector, HM Treasury, February 2010 15. The College of Estate Management, Mixed Use Urban Regeneration at Brindleyplace, Birmingham and Gunwharf Quays, Portsmouth, 2003 16. Ibid 17. Ibid 18. Ibid 19. Ibid 20. The Partnership, Single Regeneration Budget Rounds 1-4 21. Seasonally adjusted annual GDP growth, Q1. Source: Office of National Statistics, quarterly National accounts 22. Analysis based on employment data provided by Berkeley 23. Ibid 24. Ernst & Young’s calculations based on ONS Supply-Use Tables 2010, July 2012 25. Analysis based on development cost data provided by Berkeley 26. Ernst & Young’s calculations based on ONS Supply-Use Tables 2010, July 2012 27. DCLG: New Homes Bonus: final scheme design, February 2011 28. London Plan Annual Monitoring Report 8, 2010-11, Mayor of London – March 2012 29. Ernst & Young’s calculations based on DCLG: English House Conditions Survey; ONS: Average weekly household expenditure; and unit delivery data provided by Berkeley 30. The Berkeley Foundation Annual Review 2012 31. Ernst & Young’s analysis based on Street Elite Budget data provided by Berkeley New 32. Ernst & Young’s analysis based on Street Elite Budget data provided by Berkeley 33. New Economics Foundation, Punishing costs: How locking up children is making Britain less safe, March 2010 34. The Work Foundation and the Private Equity Foundation: Off the map? The geography of NEETs, November 2011 35. CBI Unfreezing the housing market, November 2011 36. ITEM Club Autumn 2012 statement 37. HMT Investment in the UK private rented sector, February 2010 38. Home Truths, NHF, 22 October 2012 39. DWP budget 2012: Housing benefit expenditure data tables, 2012

32 The Berkeley Group Economic Impact Assessment

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