1. Indirect Economic Impacts of Planning Policies & Decisions Graham Randles, Managing Director nef consulting (new economics foundation) www.pas.gov.uk

2. Introduction – nef (new economics foundation) Founded in 1986 Economics think-tank working to promote high well-being, environmental sustainability and social justice nef consulting uses nef’s methodological tools to help organisations demonstrate their impact Clients include: London Borough of Camden; Milton Keynes Council; Bridgend County Borough Council; The Crown Estate

3. Introduction – The big picture

5. Introduction – The policy framework

6. Introduction – The challenge for councils: more

7. Introduction – The challenge for councils: less

8. Measurement challenges

9. Not so new economics

10. new economics foundation – Valuing what matters nef developed Social Return on Investment (SROI) in 2003 Applied to criminal justice, looked-after children, advice services, equal pay, infrastructure investments etc since 2004 2009 Cabinet Office funded the mainstreaming of SROI – nef wrote the Guide; nef consulting is the leading practitioner 2010 CLG Valuing the Benefits of Regeneration

11. John Lewis Partnership (2011) – Our social & economic contribution Average John Lewis shop contributes £9.1m and average Waitrose contributes £1.7m to local economy Annual profit-sharing results in £40-50 million into local economies In Leicester 32% of Partner wages spent in the city centre

12. British Land (2012) – Our Socio-Economic Contributions

13. Economic value of developments – British Land

14. The Crown Estate (2013) – Our Contribution

15. The Crown Estate – Total contribution economics ECONOMICSOCIALENVIRONMENTAL DIRECT INDIRECT ENABLED

16. The Crown Estate – Total contribution economics Glenlivet Estate –23,000 ha. –30,000 visitors p.a. –Spend £1.6m a year –c.£0.9 m added value Ormonde Wind Farm –835 people employed in construction –40 operating staff, two thirds are local

17. New approaches to measurement Social Return On Investment (SROI) –Well-being economics –Environmental economics Local economic multiplier (LM3) –Origins in local economic development –Applications in commissioning, procurement

18. Social Return On Investment – An outcomes based approach A way of understanding how effectively money is spent It considers investments and triple-bottom-line benefits (economic, social, environmental) SROI = [Net value of benefits] [Investment] Measures change that matters to stakeholders Can be used to evaluate or forecast outcomes

19. Seven principles of SROI

20. Core concepts Value market and non-market outcomes in common currency Additionality Net Benefits Displacement Research, assumptions and proxies Transparency Consultation

21. Social Return On Investment – Other examples of use Central Government –Department of Health –National Audit Office: VfM –DFID: VfM Business and CSR Local authorities Third Sector

22. Example: Public Services (Social Value) Act 2012 The authority must consider— –(a) how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and –(b) how, in conducting the process of procurement, it might act with a view to securing that improvement. Example – Kirklees Council: considered within 60% quality criteria

23. Measuring local economic value – The local context

24. Measuring the economic value – What can we measure? Worklessness, skills and business development Industrial and commercial property and infrastructure Homes, communities and environment

25. Measuring the economic value – in more detail… Worklessness, skills and business development –Worklessness, skills and training –Enterprise and business development

26. Measuring the economic value – in more detail… Industrial and commercial property and infrastructure –Industrial and commercial property –Infrastructure

27. Measuring the economic value – in more detail… Homes, communities and environment –Housing growth and improvement –Community development –Environmental improvement –Neighbourhood renewal

28. LM3 (Local Multiplier 3) – The local economic multiplier Tourists Welfare benefit Business investors Export earnings

29. LM3 (Local Multiplier 3) – The local economic multiplier Purpose: to measure the impact of spending locally Can be applied at local (self-defined) and regional level –measures how money is spent and re-spent locally to 3 rounds of spending to determine local economic impact –can be applied to local authorities, businesses, projects, planning

30. LM3 examples – Bridgend County Borough Council Valuing The Local Economy project Housing retrofit - value of re-spending locally –Local works value: £7,035,082 –Local contractors: £6,538,462 (initial spending) –Non-local : £ 496,620 Average spending within a 50 mile radius: 93%

31. Indicative economic impacts of housing development Proposed new build of high value residential homes looking at the impact of: –Capital investment of £96.0 m (not including land value) –Projected annual spending by income band of occupiers of the completed scheme

32. LM3 examples – Norfolk district council Sea wall (local)Car park (non-local) Round 1 £72,000 £120,000 Round 2 £57,600 £ 20,400 Round 3 £24,980 £6,760 Total £154,580 £147,160 LM3 2.15 1.23

33. LM3 examples – Wind farm development - Scotland Each £1 of investment resulted in 71p of additional spending in all three rounds in Scotland as a whole. For every £1 invested in civil and electrical contracts, an additional 52p was re- spent in the local economy through the supply chain in three rounds.

34. New approaches to measurement Guidance available

35. New approaches to measurement – Interactive exercise Local economic impacts Well-being economics Environmental economics Illustrated by: –New jobs –Spending by new residents –Well-being value of open spaces –Congestion costs –Pollution, health and crime costs