1. Economic impact of Victoria Coach Station Final Report TBR’s Economics Team: Martin Houghton, Amy Farrelly and Mark Edward Client: Victoria Business Improvement District (BID) 31 st July 2013

2. For Further Information Contact: Martin Houghton Martin.houghton@tbr.co.uk

3. Summary In early 2013, Victoria’s Business Improvement District (Victoria BID) appointed TBR to undertake an economic impact study of Victoria Coach Station (VCS). The key purpose of the study was to understand the economic impact of VCS and what the implications might be of it relocating outside the borough but within London. The study included assessment of Gross Revenue and Gross Value Added impacts. The findings show that the economic impacts generated in Westminster as a result of Victoria Coach Station are: Table 1: Total Economic Impacts in Westminster The findings also show that if VCS were to relocate, the total likely loss to the local economy would be in the order of:£24.5 million in GVA. If the VCS site were to be re-developed for alternative use, a wide range of outputs could be achieved based on configuration and use. A theoretical maximum of £403 million was established. Two development schemes prepared by Grosvenor generate outputs of £130 million and £291 million respectively. If VCS were to be relocated to a purpose-built facility elsewhere in London the economic benefits to the new site would be in the order of £45 - £57 million depending on the configuration. The higher number relates to a single hub and the lower one to a network of three or four smaller facilities. ActivityRevenueGVA VCS operations £8,377,000 £4,601,000 Passenger spend £128,693,337 £42,697,348 Coach operations £5,535,467 £1,930,567 Procurement effects £7,415,502 £1,279,952 Induced effects £123,956 £39,673 Total £150,021,305 £50,548,540

4. Contents Page Introduction 4 Aims and Objectives 7 Methodology 8 Economic Impacts 9 Total Gross Revenue Impacts 10 Total Gross Value Added 11 Potential Losses 12 Alternative Use 13 Future Options 14 Conclusions 15 Note: This report should be read in conjunction with the companion spread sheets and the accompanying user guide.

5. Introduction Victoria Coach Station Victoria Coach Station was opened at its present site on Buckingham Palace Road/Elizabeth Street, Westminster in 1932 by an association of coach operators, London Coastal Coaches Limited. In the 1970s, responsibility for the Coach Station transferred to the National Bus Company (NBC) subsidiary, National Travel (South East) Limited and in 1978, London Coastal Coaches Company was brought back to life and renamed Victoria Coach Station Limited. In the 1980s, Victoria Coach Station Limited supported the expansion of the Station into the old Samuelson’s Coach Garage in Eccleston Place. Following the privatisation of the NBC companies in 1988, ownership of Victoria Coach Station Limited was transferred to London Transport, and in 2000 this became Transport for London (TfL). Since this time, the Station has undergone a series of major works, including the development of: – Victoria Coach Station Departures Terminal (1990–1992) £4.1m – Victoria Coach Station Arrivals Garage (1991) £500K – Victoria Coach Station Arrivals Terminal (1993–1994) £330K Today, Victoria Coach Station is the largest and most significant coach station in London, providing long distance coach services and a departure point for 1,200 destinations in the UK and 400 in mainland Europe. The station now includes separate arrival and departure terminals located on opposite sides of Elizabeth Street, comprising of 21 departure gates and 26 coach bays, covering an area of 3.3 acres (13,000 m 2 ). Each year, 12 million passengers use the station and it is expected that there will be approximately 500,000 coach movements per annum in the Victoria area by 2026. While the council recognises that coaches play a significant role in the provision of long distance travel and commuter services, the local impact on the traffic network as well as residential and business amenity is a longstanding and continuing concern.

6. Introduction Policy Background While coach tourism alone generates over £300 million a year to London’s economy, it is increasingly important to ensure that all stations are appropriately located to minimise their impact. The Mayor’s Transport Strategy highlights the growing pressures of congestion and an increasing population and suggests that a conveniently located coach terminal in London is important for both operators and passengers in the longer term. To support this, the Strategy comments on the need to develop a series of coach hubs or alternative locations for coach station facilities to provide easier access to the coach network, while retaining good access to central London for coach operators. The Mayor’s London Plan supports this approach. The National Planning Policy Framework (NPPF), which seeks to encourage solutions which will lead to a reduction in greenhouse gas emissions and congestion and suggests that developments should give priority to pedestrian and cycle movements, and should create safe and secure layouts which minimise conflicts between traffic and cyclists or pedestrians, avoiding street clutter and where appropriate establishing home zones. Westminster’s Core Strategy recognises the current pressures presented by the Victoria Transport Interchange (comprising Victoria Main Line Station, London Underground stations, Victoria Coach Station, local London bus network and Terminus Place), and suggests that connections between the transport routes need to be improved in order to support Victoria in becoming recognised as a place, not simply a space to pass through. The Core Strategy identifies Victoria as an Opportunity Area for development to accommodate for the anticipated demand for new homes and employment space. In developing this area, the Strategy comments that it will be important to maximise the opportunities that exist for redevelopment, retail and employment provision to create a more vibrant mix of uses, and a greatly improved public realm.

7. Introduction Policy Background Promoting sustainable development in Westminster is considered to be particularly important, given the 15% projected employee growth in Westminster over the next 20 years (on top of the 600,000 people already employed in the area) and the current average house price of £1million (which is also rapidly rising). The Local Economic Assessment (LEA) for Westminster additionally highlights the issue of overcrowding, as the daytime population in Westminster swells to around 1million people. The City of Westminster Council’s Victoria Area Planning Brief: London SW1, (2011), also has a strong focus on reducing all forms of vehicular and pedestrian traffic congestion. The brief highlights that the Victoria area is currently under significant stress in terms of congestion and critical issues for the area are outlined as: – There is insufficient space for pedestrian movement, leading to considerable conflict with other road users. – The Underground station is regularly closed for short periods during the morning peak and increasingly at other times due to excessive demand. – The existing bus station (Terminus Place) cannot adequately accommodate all bus stops and stands required for Victoria, and it provides no scope to cater for further frequency increases. – The movement of coaches in and around the coach station impacts on local residential amenity. – The Inner Ring Road is operating near to capacity and is sensitive to any disruption. The Planning Brief further suggests that, rather than expansion, high priority should instead be given to resolving the current problems of capacity at and around the Coach Station, improving pedestrian links to Victoria Interchange, addressing poor links to other transport modes, and to making adequate and convenient taxi provision at the coach station. The combination of these factors means that it is increasingly important to ensure that any future development in the Westminster area supports a reduction in vehicle and pedestrian congestion to increase accessibility. The movement of the Coach station is seen as one key method by which to do this, relocating the station to a site with lower pedestrian congestion and increased accessibility to nearby transport links.

8. Aims and Objectives Study Aims In exploring the options for the future development of Victoria Coach Station and to understand whether relocating the Coach Station elsewhere in London would help to address some of these issues, Victoria’s Business Improvement District (Victoria BID) commissioned this study which seeks to: – Establish the current economic impact of Victoria Coach Station. – Identify any opportunity cost associated with the operation of Victoria Coach Station (VCS) on the economy of Victoria/Westminster. – Establish the economic impact of a purpose built replacement / international coach station in order that this may be compared and contrasted to the current facility.

9. Methodology Method Outline In order to deliver these objectives, the following methodological stages were undertaken: 1.First the spend generated by VCS was identified from their accounts. 2.Secondly, expenditure by passengers and coaches was estimated. This involved establishing the total number of passengers and coaches along with their reason for visit. Next, the average spend per passenger/coach was generated primarily using a combination of Visit England and International Passenger data and applying a coach travel deflator to account for the typically lower expenditure of coach travellers than those using other modes of travel. A retained revenue multiplier was also applied to this spend figure to account for leakage (i.e. to discount spend outside of Westminster). 3.Spend by employees of VCS as consumers in the local area was also considered to ensure that induced effects were captured. This was particularly important to consider as it would be lost if VCS were to relocate outside the borough. 4.Procurement impacts originating from spend by VCS, consumers in local shops and by coach operations were also assessed. 5.The above were summed to generate a total revenue impact arising from the operation of VCS. 6.Multipliers were then applied to convert revenue to Gross Value Added (GVA). 7.To understand the likely impact of relocating VCS outside Westminster, the opportunity cost for an alternative use of the current site was also considered. 8.Finally, the costs and impact of alternative, purpose built coach station facilities were assessed. Two options were considered. Option 1 involved developing a major hub, assumed to be within an area covered by Zone 1/Circle Line, and option 2 a network of 3-4 mini coach hubs within Zones 3 1, 2 and 3.

10. Economic Impacts Economic impacts arise from: – Operation of VCS itself. – Spending by passengers within VCS and across Westminster, e.g. in shops, hotels, restaurants and bars etc. – Spending related to coach operations, e.g. maintenance, cleaning, fuel etc. – Procurement effects, or indirect spending by VCS, passengers and coach operations, i.e. down the supply chain. – Induced spending related to those employed by VCS (circa 65 people), e.g. by VCS, by coach operators (i.e. drivers) and in-station concessions’ staff (circa 70 people).

11. Total Gross Revenue Impacts Total revenue impacts resulting from the operation of VCS were generated by summing the impact of: The operation of VCS Passenger spend Spend related to coach operations Procurement effects Induced effects (employees as consumers). Table 2: Total Revenue in Westminster Thus the total revenue impact of the operation of Victoria Coach Station on the economy of Westminster is of the order of £150 million. A more insightful assessment is provided by Gross Value Added. This is provided on the next page. RevenueTotalSource Operation of VCS£8,377,000VCS Accounts for 2012 Passenger spend £128,693,337Turnover Impact Calculator Coach operations £5,535,467Turnover Impact Calculator Procurement effects£7,415,502Turnover Impact Calculator Induced effects£123,956Induced Impact Calculator Total revenue impact £150,145,261

12. Total Gross Value Added (GVA) Impacts GVA impacts were generated by summing: The operation of VCS Passenger spend Spend related to coach operations Procurement effects Induced effects (employees as consumers). Table 3: GVA Impacts Thus the overall impact of the Victoria Coach Station on the economy of Westminster can be estimated at just over £50 million. GVATotalSource Operation of VCS £4,601,000 VCS Accounts for 2012 Passenger spend £42,697,348 GVA Impact Calculator Coach operations £1,930,567 GVA Impact Calculator Procurement effects £1,279,952 GVA Impact Calculator Induced effects £39,673 GVA Impact calculator Total GVA impact £50,548,540

13. Potential Losses If VCS were to be relocated outside Westminster a range of economic impacts would be felt. These would include: – Loss of revenue and GVA derived from the operation of VCS itself – this would definitely be lost. – Loss of revenues and GVA from coach operations – this would be lost if all operations moved to the new hub or hubs. – Loss of procurement effects – this would definitely be lost. – Loss of induced effects, i.e. spend by staff of VCS and the in-station concessions – this would definitely be lost. – Loss of revenues from commuter passengers – although commuters would visit Westminster anyway by finding alternative travel options – a partial loss. – Loss of some visitor spend, though many will want to visit Westminster anyway – a partial loss. Table 4: Potential Losses Thus the likely loss to the Westminster economy is likely to be of the order of £24.5 million Item Amount (GVA) Operation of VCS (defined loss) £4,601,000 Operation of coaches (defined loss) £1,930,567 Procurement effects (defined loss) £1,279,952 Induced effects (defined loss) £39,673 Reduced spend by transit passengers (anticipated loss – 50%) £2,203,966 Reduced spend by other passengers/visitors (anticipated loss 35%) £13,401,295 Total Loss (rounded) £24,500,000

14. Alternative Uses To understand what the likely impact of relocating VCS would have on the Westminster economy, the opportunity cost for alternative uses for the current site was also considered. Two broad scenarios were considered: – Scenario 1 looked at a complete re-build and that the whole of the building would be used for employment purposes, i.e. did not include residential use. This was used to determine the maximum theoretical impact. – Scenario 2 is based on a possible redevelopment schemes set out by Grosvenor Estates and features a mix refurbishment and new build options. Scenario 2 considers a set of mixed uses including; residential, office, retail, hotel and retail.

15. Alternative use – scenario 1 The scenario 1 model for alternative use considers: the physical footprint (80%) of VCS (not 100% as it was considered that the dimensions of the site would preclude a single monolithic building being erected), the number of floors, implied jobs and GVA per job (using the Westminster ‘average’). The assumptions applied to these fields are as follows: – Total floor plate of 8,000 m 2 – 11.6 m 2 per employee – GVA per head of £104,000 (Westminster average) The following table applies these assumptions, looking at the options for a development between 3-7 floors in height. Table 5: Assumed GVA for alternative use The overall maximum GVA that the site could accommodate based on full employment use is therefore estimated at between £173 - £403 million. The actual output would depend on building configuration and actual use. Floor spaceTotal Assumed GVAImpact 3 floors£173mVCS x 3.5 (or 6.0 times likely loss) 4 floors£230mVCS x 4.6 5 floors£288mVCS x 5.8 6 floors£345mVCS x 6.9 7 floors£403mVCS x 8.1

16. Alternative use – scenario 2 Scenario 2 is based on two potential development schemes developed by Grosvenor Estates. The calculation of output are based on internal floor areas set out in these plans and accommodates a range of uses. Within this scenario two options are considered: – Option 1 Refurbishment of much of the current site including the departures hall and some new build. This foresees a mix of uses, spread over a gross internal area of 34,986m 2 : Residential Office Hotel Leisure Retail – Option 2 A more ambitious scheme that sees a complete new build on Buckingham Palace Rd. The anticipated internal area is expanded to 57,496m 2 with the same uses as in option 1 above. GVA is estimated in a similar way to that used for scenario 1, i.e. internal area is used to establish the number of jobs per activity and sector based multipliers are then used to calculate GVA. For option 1, total GVA is estimated at £130 million. For option 2, total GVA is estimated at £291 million. In both cases the overall economic impact would increase from this development.

17. Future Options In order to understand the likely economic impact associated with developing a new coach station, two development options were assessed. Option 1 considers developing a major hub - assumed to be within an area covered by Zone 1/Circle Line and option 2 is based on 3-4 mini coach hubs within Zone 3. The assumptions for these developments are set out below, showing a total cost of between £20-70million (excluding land): Table 6: Assumed GVA for alternative use Option 1: Major HubOption 2: Mini hubs Coach stands - 60 departures (accommodate some 180-240 departures an hour) – around 20 arrival stands – accommodate 240 arrivals an hour Depending on location may also have bus stands for local buses Coach parking – 30 If space short – two levels – one arrivals and one departures – if large site all at one level Around a quarter of the size Coach stands - 15 departures (accommodate some 45-60 departures an hour) – around 5 arrival stands – accommodate 60 arrivals an hour Depending on location may also have bus stands for local buses Coach parking – 10 Facilities – waiting facilities for 1,000 people (seated) in departures and 100 arrivals Coach ticket selling facilities, Information point both arrivals and departures Cafés, news kiosk/book store, hot and cold food outlets– food store (e.g. Tesco metro type), hotel booking (arrivals), minicab booking (arrivals), mobile phone store, bureau de change – total retail space – 20,000 sq ft – 20-30 units (although some may already be onsite and would therefore be replacements rather than new). Other facilities required: Toilets, Showers, Cash machines, Tourist information, Car hire, Left luggage lockers or office, Short term car park for 150 cars – motorbike and cycle parking, Staff parking, Car drop off/pick up point, Taxi rank, Minicab drop off/pick up point, Bike hire. Separate coach facilities: Coach parking – including overnight and long stay parking, Refuelling, Coach wash, Maintenance pits and area, Toilet drop facilities, Mess room for drivers, Control room including security for coach station staff, Rubbish disposal and coach interior cleaning. Facilities – waiting facilities for 250 people (seated) in departures and 25 arrivals Cafés, news kiosk/book store, hot and cold food outlets– food store (e.g. Tesco metro type), hotel booking (arrivals), minicab booking (arrivals),,– total retail space – 5,000 sq ft – 10-15 units Short term car park for 40 cars – motorbike and cycle parking All other features the same Annual GVA generated: £58.4m Cost £70m excluding land Size – c25,000sqm if single level Annual GVA generated: £58.4m (based on having 3-4 hubs) Cost £20m each excluding land Size – c6,000sqm each

18. Conclusions Victoria Coach Station is responsible for some £150 million in revenue and £50 million in GVA. This is made up of three key elements: – The operation of VCS itself – Spend by passengers and coach operators – Indirect and induced effects. If the VCS were to be relocated there would be a likely loss to Westminster’s economy in the order of £24.5 million per annum. However, not all the economic benefit would be lost as many visitors would want to visit Westminster any way. If the VCS site were to be redeveloped once the coach station left it could result in a wide range of outputs depending on the nature of the redevelopment and its uses. – A theoretical maximum of £402 million for 7 storey building used exclusively for employment purposes. – A likely output of between £130 million and £291 million for a set of mixed use developments involving new build and refurbishment. Thus the operation of a coach station on the current site(s) represents an economically sub-optimal use of this land.. Two configurations for purpose-built stations were considered; – A single site – A set of three or four smaller units. Depending on the configuration of any replacement coach stations, GVA of between £45 - £57 million could be generated for the new host borough’s economy. The lower figure is for the multiple smaller hubs units and the larger for the single site.

19. Sources VCS financial accounts. TCR, TBR’s longitudinal database of UK businesses. Visit England, statistics from GB Tourist and GB Day Visitor surveys, 2011. Survey of businesses in Camden, TBR and Qa Research, 2013. Annual Business Survey 2010. Employment Densities Guide, 2nd edition, OffPAT/Homes and Cummunities Agency, Drivers Jonas Deloitte, 2010. Development concepts from Grosvenor. Background Papers: – National Planning Policy Framework – Mayor’s London Plan – Mayor’s Transport Strategy – Westminster City Council’s Core Strategy (NPPF Version) – Westminster City Council’s Local Economic Assessment – Westminster City Council’s Victoria Area Planning Brief 2011.