1

Outline Business Case Template 24th March 2016

1 Summary Information

Project name Access to the Southampton Airport Economic Gateway (SAEG)

Delivery Location Eastleigh Borough

Lead applicant

organisation

Hampshire County Council

Postal address Strategic Transport,

The Castle,

Winchester

SO23 8UB

Email address Heather.walmsley@hants.gov.uk

Phone number 01962 846089

Project lead name Heather Walmsley

Partner names Eastleigh Borough Council

Southampton Airport

Project summary This Outline Business Case seeks funding for infrastructure improvements necessary

to:

open up the regionally significant strategic development sites at Southampton

Airport Economic Gateway (SAEG);

improve access to the Southampton International Airport;

complement and add value to the recently completed improvements to the M27

Junction 5; and

enhance access to the former Ford site, which is being developed by

Mountpark for logistics uses.

The key SAEG development sites are two greenfield sites on land owned by

Southampton Airport and Network Rail. The sites are largely located to the north east of

the airport runway and to the south of the Botley railway line and are currently land

locked with development frustrated by lack of access. There are also proposals to

redevelop the Barton Park Industrial site north of the Botley railway line, which is

accessed via the B3037 Bishopstoke Road and the Chickenhall Lane cul de sac.

Access to Southampton Airport is frustrated by the existing single carriageway road over

rail bridge and Spitfire and A335 Wide Lane roundabouts at either end of the bridge.

The existing bridge has a poor alignment which results in Heavy Goods Vehicles

(HGVs) being unable to traverse the bridge without crossing the road centre line and

using the opposing carriageway.

Access to the SAEG land has been proposed via the Chickenhall Lane Link Road

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(CLLR), for many years. The CLLR would connect the B3037 Bishopstoke Road to the

M27 Junction 5 via: an extension to the existing Chickenhall Lane; a new bridge across

the Botley railway line; and a new bridge across the main Southampton line and A335.

The CLLR would thus provide access to the greenfield and redevelopment sites both

north and south of the Botley railway line, as well as providing improved access to

Southampton Airport. The scheme would build upon recently completed improvement

works at the M27 Junction 5 helping to optimise the effectiveness of the approaches

from north of the motorway. The scheme would also provide congestion relief on the

A335 through Eastleigh town centre and in the designated Air Quality Management

Area.

Notwithstanding the above the scale and engineering complexities associated with the

CLLR present significant delivery challenges with associated high costs. The high costs

are due in part due to the complex nature of the scheme located adjacent to a live

railway line and the requirement for track closures and associated compensation costs

to rail operators due to the busy nature of the line.

In light of the above a phased approach to delivery is being proposed as part of this

business case. As an initial phase opportunities are currently being investigated to bring

forward access to the SAEG sites south of the Botley line, based around an updated

version of the southern section of the CLLR. The modified scheme could include

improvements to Wide Lane bridge and Spitfire roundabout to the north of the M27

Junction 5 if feasible, however once again there are significant engineering challenges

and complexities associated with crossing the live railway lines.

In accordance with the above this business case seeks funding for a first phase of the

infrastructure necessary to open up the SAEG sites to the south of the Botley railway

line. The precise scheme details and extent of the improvements are currently being

developed, however, the scheme will aim to deliver a significant uplift in highway

capacity to future-proof the network and make it more resilient and will facilitate access

to the SAEG sites. It will also provide a ‘gateway’ to Southampton Airport enhancing its

status as a regional hub.

Funding is required due to the anticipated significant costs of the scheme that cannot be

met by local public and private sector funding alone.

Not delivering the project will impact upon the attractiveness of the SAEG sites and will

limit any significant development on this land. It is also likely to limit ability of the airport

to expand its operations.

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2 Strategic Case

What problem or

opportunity is the

project seeking to

unlock?

The Southampton Airport Economic Gateway (SAEG) in its entirety is in excess of

100 ha in size and presents the largest opportunity for commercial development in

the Solent LEP area. (see plan in Appendix A for red line boundary of site) It is

estimated to be capable of accommodating over 1.8m sq ft of commercial

floorspace1 and consists of brownfield and undeveloped land in multiple ownerships.

Enabling the development of 2 parcels of land within this that are owned by

Southampton Airport and Network Rail is a critical first step in stimulating the

development of the wider SAEG site. Both are greenfield sites but currently have no

means of highway access and are further constrained by the adjacent airport runway

and two main railway lines and associated loop line.

SAEG, formerly recognised in planning policy as Eastleigh Riverside2 , has been

identified as having the potential to contribute significantly towards the economic

growth aspirations of the sub-region in both Eastleigh Borough Council’s adopted

(2001-2011) and emerging Local Development Plans (2011-2029).

Whilst it is strategically significant given its capacity to deliver much needed

employment space in both the Borough and the Solent LEP area, the site has

remained undelivered since its initial allocation. Access to the site is constrained by

ecological designations to the east, the M27 motorway to the south, the Botley

railway line to the north and Southampton Airport and Southampton Airport Parkway

railway line and station to the west. The A335, which provides the main artery route

into Eastleigh town centre from the M27 motorway, is also located to the east of the

site. These access constraints, combined with a depressed development market

and complex landownership arrangements have been key contributors to the site

remaining undelivered.3

Consequently, it has been recognised that the development of the site could be

brought forward incrementally rather than as a whole, prioritising deliverable sites

which could be unlocked by phased infrastructure interventions in the shorter term.

Land within the ownership of Southampton Airport, Network Rail and the

decommissioned former Ford site have been identified as key enablers to bring

forward initial development, acting as catalysts for the delivery of the wider site.

A significant proportion of the former Ford site has recently been purchased by

developer Mountpark for the development of 45,198 sq m of warehousing and

industrial uses and work is already underway to progress this development. This in

itself presents a major opportunity for the Solent to meet much needed demand for

logistics space in the South Coast market for which there is a critical lack of supply.

1 Hampshire Key Development Sites Portfolio, February 2016. Figures also calculated from the Southampton Airport

Economic Gateway Enterprise Zone application, 2015 and include the redevelopment of the former Ford site.. 2 The former Ford site was not included as a development site within the original planning policy for Eastleigh

Riverside. Riverside but is now considered to be part of the Southampton Airport Economic Gateway site.

3 A Vision Strategy for Southampton Airport Employment Hub, ARUP, February 2015.

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The ‘unlocking’ of land owned by Southampton Airport and Network Rail for

development through the provision of the infrastructure improvements outlined in this

business case, presents an opportunity to provide much needed grade A office

space for business at a gateway location into the city of Southampton.

There is increasing consensus amongst commercial property agents operating within

the M3 and South Coast markets that there is a growing supply and demand

imbalance of quality, grade A office space. A number of development sites that were

once allocated for offices have now either been converted to alternative uses or are

subject to planning applications for change of use and this trend is predicted

continue in 20164.

In the South Coast market, Lambert Smith Hampton is predicting that in 2016 the

supply of office space will fall to below three year’s supply5. This decrease in office

supply has been an occurring trend since 2013 for the South Coast.

Although in their recent national report Lambert Smith Hampton have reported that

take up was 31% above the 10 year average in the South Coast market,

transactional activity in the first quarter of 2016 has been subdued6. Only one office

building remains available over 40,000 sq ft with its own front door7. The only

speculative development currently underway comprises a single scheme of 30,600

sq ft at Southampton Science Park, due for completion in Autumn this year and in

Portsmouth and Southampton, office conversions for alternative uses, including both

residential and student accommodation continue to impact on city centre supply8.

Additionally, in Southampton city centre a tired office market is resulting in a difficulty

to attract new jobs and even retain existing employers. In 2015, HSBC relocated out

of Southampton due to the lack of available, grade A office space in the city centre

that could accommodate their need for additional space. This resulted in 1000 jobs

and their spending power being lost to an out of city location, which undoubtedly has

generated more car usage and associated congestion along the M27.

The development of the land owned by Southampton Airport and Network Rail

provides the opportunity to fulfil the demand for grade A office space within the

South Coast market, which is currently at a tipping point due to the severe lack of

supply.

Employment space developed in this location would benefit from being situated in

close proximity to a transport hub which has the advantage of being globally

connected with links between air, rail and strategic highway. This level of

accessibility is highly sought after by businesses and investors. Southampton

Airport provides flights to over 50 destinations with world-wide connections, including

4 Lambert Smith Hampton, South Coast Office Market Report November 2015.

5 Lambert Smith Hampton, South Coast Office Market Briefing 2016.

6 Lambert Smith Hampton 2016 National Office Market Report, February 2016.

7 Lambert Smith Hampton, Twitter, 27th April 2016.

8 Lambert Smith Hampton 2016 National Office Market Report, February 2016.

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to major European business districts such as Munich and Hamburg. Southampton

Airport Parkway train station also provides a direct train service to London Waterloo

in 69 minutes and the site itself sits within the M27/M3 corridor, which are integral

points on the strategic road network that connect to the M25 and the A34 to the

Midlands and the North.

Furthermore, the development of prime office space in this location would also be

well positioned to capitalise on an overheating office market in central London, which

is already leading to high take up rates in the Thames Valley and key urban centres

outside the capital such as Reading. This is evidenced in recent major relocations

including Lloyd’s Register to Southampton, Time Incorporated to Farnborough and

EDF and Rio Tinto to the Thames Valley.

How does the project fit with the Solent LEP's Strategic Priorities?

Unlocking sites for housing and employment

The development of the land owned by Southampton Airport (21.6ha) and Network

Rail (7.9ha) have the capacity to deliver up to 75,190 sq m and 29,400 sq m

respectively of new employment floor space over a ten year period9. As indicated in

the footnote below, there is a degree of variation to the floorspace capacity figures

generated for these two sites and these have further been outlined in Appendix B.

Based on these floor space calculations within the Southampton Airport Gateway

Enterprise Zone Bid, (2015), it is estimated in the order of gross 5,000 jobs could be

created over a phased ten year period should both the land owned by Southampton

Airport and Network Rail be developed for a range of B1a (office) and B1b (light

industrial) uses. This investment associated with unlocking these sites is projected

to add approximately £170m in net additional output (GVA in 2011 prices) to the

economy10.

The redevelopment of the former Ford site, which consists of 16.11 hectares of

brownfield land of which 10.7 hectares has been bought by developer Mountpark, is

more advanced in nature and a planning application is soon to be submitted for its

redevelopment. Pre-application discussions with Mountpark indicate that up to

45,198 sq m of floor space for B8 (warehousing) and B2 (industrial) and B1(c) (light

industrial) uses is to be created. Up to 690 jobs are associated with Mountpark

unlocking this part of the site initially, 420 of which are expected to be net

additional11. This investment is projected to add about £23m in net additional GVA

(in 2011 prices) to the economy. Please see Appendix D for further information.

Should the site be developed in full, it is estimated that up to 1,338 jobs could be

created in the longer term.12

9 These floor space calculations are based on those proposed within the Southampton Airport Economic Gateway

Enterprise Zone, (2015) submission. A range of floorspace estimates for these two parcels of land have been undertaken by Eastleigh Borough Council as part of their Strategic Land Availability Assessment, (2015). These are summarised in Appendix 1. 10 This analysis is based on the latest government guidance available at: HMT (2003) The Green Book available at: http://www.hm-treasury.gov.uk/data_greenbook_index.htm 11 The job numbers associated with the former Ford site are estimates only as the planning application for the site’s redevelopment which is anticipated to provide this information has not yet been submitted. Calculations on how the job and GVA estimates have been calculated are shown in Appendix D. 12 Southampton Airport Economic Gateway Enterprise Zone bid, 2015.

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As evidence in Appendix B there is some degree of variation in the floorspace and

estimated job figures associated with the development of the land owned by

Southampton Airport and Network Rail. This is reflective of the absence of robust

figures relating to the development of these two sites, which would only be available

if a full economic impact assessment were to be undertaken and we would look to

progress this with key stakeholders including the Solent LEP, Eastleigh Borough

Council, Network Rail and Southampton Airport following on from the submission of

this bid.

The provision of new employment space in this location aligns with the Solent LEP’s

vision to create sustainable economic growth, attract private sector investment into

the Solent region and thus create new jobs and increase GVA. Southampton Airport

and Eastleigh Borough Council are also in dialogue with the University of

Southampton regarding the creation of a new Science Park on the airport’s land as

an extension to the existing campus in Chilworth, Southampton.

Improving our connectivity within the Solent and beyond

Unlocking both the land owned by Southampton Airport and Network Rail will enable

much needed employment development at a key transport enabled economic nexus

in a gateway location close to the centre of Southampton. SAEG is situated north of

the M27 Junction 5 and has ready access to the M3 heading north from

Southampton. The sites are in close proximity to an international airport and adjacent

to Southampton Airport Parkway Railway station which provides a direct train service

to London Waterloo within 69 minutes. Eastleigh town centre railway station is also

located in close proximity to the north of the site (please refer to site map in

Appendix A). The site is also within close proximity to two international ports in the

cities of Portsmouth and Southampton.

Highway infrastructure improvements are much needed to support the development

of the SAEG sites. Improvements will not only provide direct access to the site but

will also improve connectivity to the strategic road network within the Solent and

beyond. Improved accessibility will help bring forward much needed employment

space in a globally connected location which is highly sought after by business.

Stimulating and supporting innovation

Discussions are underway with the University of Southampton regarding the

development of Southampton Airport’s land for an extension to their existing and

highly successful Science Park at Chilworth. The University of Southampton is a

long standing and highly successful science park with a strong emphasis on the

commercialisation of technology and supporting business growth.

The current 18.2 ha campus in Chilworth accommodates over 100 high-tech

business start-ups and 1,100 jobs, but with occupancy at 90% and with no further

room to grow the campus will soon run out of capacity to provide new space. Land

for expansion is much needed to ensure the continued growth of the Science Park.

Development on the SAEG sites would consist of a range of business, R&D and light

industrial uses on the land owned by Southampton Airport and potentially, the land

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also owned by Network Rail. The University of Southampton are considering a

phased programme that would deliver around 9,000 sq m initially13. Southampton

Airport have also indicated that they would safeguard some of the land within their

ownership for ancillary airport uses.

Businesses within the University of Southampton Science Park are supported by the

SETSquared partnership. This is a business incubation support service established

between the Universities of Southampton, Bath, Bristol, Exeter and Surry which was

recently ranked the global Number 1 University business incubator (UBI Global,

2015).

Providing development land that can accommodate the continued growth of the

Science Park and provide the space needed by additional start-ups to allow them to

access support through the SETSquared Parternship aligns with the Solent LEP’s

ambition to work with Higher Education Institutes to accelerate high value,

innovation-led growth. The Solent LEP is prioritising high tech development and

spin-off from University research under its Innovation work stream and therefore

enabling the development of these two sites for a second Science Park supports this

objective. This also supports national policy which is aiming to encourage better

collaboration between universities and the business community.

Improving the skills and talent of our current and future workforce

As well as the potential for the site to accommodate grade A office space,

discussions are already underway between Southampton University, Eastleigh

Borough Council and Southampton Airport regarding the development of

Southampton Airport’s land as an extension to the successful and well established

University Science Park based in Chilworth. This is to meet the future property

needs of high value, bio-medical and manufacturing firms as the existing Science

Park at Chilworth reaches its development capacity.

The 2014 Research Excellence Framework confirmed that the University of

Southampton is ranked 8th amongst UK universities as a leading research

institution14. It provides Higher Education students with access to world class

research facilities in the following disciplines: marine engineering, microelectronics

and computer science, ocean and earth science, developmental origins of health and

disease and sound and vibration optoelectronics. The University of Southampton

Science Park provides space for University ‘spin-offs’ to develop and grow.

Providing adequate space for these spin-offs alongside high quality business support

through the SET Squared Partnership will improve the skills and talent base of our

current and future workforce.

Supporting business growth through access to

Enabling the development of Southampton Airport and Network Rail’s land through

facilitating access to these sites will provide the opportunity for much needed office

space to be developed to meet existing market demand. This will support the growth

13

Southampton Airport Gateway Enterprise Zone Bid, 2015. 14

Southampton Airport Economic Gateway Enterprise Zone bid, September 2015.

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resources and advice

of existing businesses looking for premises to expand into, as well as providing office

space for new businesses looking to relocate in the Solent.

Both sites also present the opportunity to provide the space needed for the

University of Southampton Science Park to expand and grow. This expansion will

provide grow on space for additional business start ups which will benefit from

support through the world-renowned SETSquared Partnership.

Supporting our key strategic sectors

The Solent LEP has a focus on developing strategic sectors and clusters of marine,

aerospace, defence, advanced manufacturing, engineering, transport and logistics

businesses – with the aim of establishing the area as a business gateway, both at

local and international levels15.

Improving access to both Southampton Airport and Network Rail’s land will help, in

the long-term, to unlock these two critical employment sites which can then be

developed to provide business space to support these strategic sectors in a globally

connected gateway location. Given the sites positioning, businesses within the

aerospace, transport and logistics sectors will benefit from new employment space

developed in this location, as well as businesses within the ICT, Business and

Financial Services sectors.

How will the project

raise productivity in the

Solent?

Improving access to Southampton Airport and Network Rail’s land to facilitate their

development for a second University of Southampton Science Park aligns with

national Government policy which seeks to strengthen the linkages between

universities and businesses and encourage local investment.

The Transforming Solent Productivity and Growth Supplement, published in January

2016, highlighted that for the Solent LEP to capitalise on its strengths and raise

productivity the following must be undertaken:

• Invest in economic infrastructure

• Develop the skills that the Solent LEP economy needs to succeed

• Ensure that ideas and knowledge are at the forefront of the Solent LEP’s

approach, supporting businesses to innovate, export and grow and;

• Build on the Solent area’s sectoral strengths and recognise its comparative

advantage.

The Solent LEP has also made clear it’s ambition to increase GVA by 3% per

annum year which is a challenge given that output per capita is 18% below the south

east average16.

The development of Southampton Airport and Network Rail’s land will provide space

of the right type and quality, alongside a strong business support offer to enable

15

Solent LEP, A Strategy for Growth, December 2012. 16

Southampton Airport Gateway Enterprise Zone bid, November 2015.

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businesses to innovate, export and grow. This could be in the form of new grade A

office provision alongside smaller space for SMEs. Whilst the development of these

two sites will inevitably provide space for the expansion of existing businesses within

the Solent, it will also be driven by the development of new businesses locating into

the area and utilising the workforce.

How will the proposal

demonstrate

additionality?

Enabling access to the land owned by Southampton Airport and Network Rail will

facilitate the development of additional employment space to meet the demand for

grade A office space. If discussions come to fruition, both sites (subject to demand)

could also be developed as an extension to the University of Southampton Science

Park, which would provide additional spin out space for start-ups and SMEs.

Whilst the development of these two sites will inevitably provide space for the

expansion of existing businesses within the Solent, it will also be driven by the

development of new businesses locating into the area and utilising the workforce. At

the current time, the development potential of these two sites is inhibited by poor

infrastructure restricting access to the site and this will remain the case without

intervention.

Describe the wider

economic impacts of

the proposal

The SAEG is the largest employment site in the Solent, capable of accommodating

over 1.8 million sq ft of employment space (this includes the development of the

former Ford site). The development of the two land parcels within this owned by

Southampton Airport and Network Rail is envisaged to act as a catalyst towards the

development of the wider site and therefore improving access to these sites is the

first step towards achieving this longer term ambition.

The sites development will provide a globally-connected employment hub in a highly

sought after gateway location into central Southampton, as well as help to improve

the position of Eastleigh as a business location to attract inward investment and

capitalise on businesses looking to relocate outside of London.

Describe the social

impacts of the

proposal

The development of the SAEG site will provide much needed employment for a

growing local population and population and also has the potential to accommodate

a range of apprentice opportunities during the construction phases. It will secure

and safeguard a range of job opportunities in a location which is easily accessible

and within a key journey to work travel area at the gateway to Southampton city

centre.

Outputs (For each, explain where the output will be delivered (in Solent or outside), and the basis of

your calculation).

Number of new Up to 6,300 jobs to be created in the Solent area as defined above. These figures

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permanent jobs created

directly

only include the development of the former Ford site, Southampton Airport and

Network Rail land.

Number of new

permanent jobs created

indirectly

Unknown

Number of safeguarded

jobs

Improved infrastructure and connectivity will help to maintain strong transport links

which are essential to both retain existing as well as to attract new businesses.

Without transport infrastructure improvements worsening traffic conditions will make

the area less attractive as a business location and could be a contributory factor in

firms relocating to other better connected areas.

New houses enabled Not applicable

New employment /

education space

enabled (type and m2)

Southampton Airport’s land: 75,190 sq m

Network Rail’s land: 29,415 sq m

Former Ford site: 45,198 sq m (already to come forward but transport

improvements will support the development of this site by improving pinch points

on the highway network.

Skills Estates improved

(type and m2)

Not applicable

Skills outputs

(apprentices / learners)

In the longer term, businesses occupying new employment space at both

Southampton Airport and Network Rail’s land are anticipated to employee and

element of apprentices but the exact number is unknown.

Total wider leveraged

investment resulting

from project

Estimated to be in the order of £142,000,000 into the Solent area. See Appendix B

for information on how this has been calculated.

Describe any other

outputs to be delivered

as a result of this

project.

The scheme will provide access to a multi-modal transport interchange with

associated wider transport connectivity benefits linked to modal shift thereby

helping to reduce peak hour congestion on the strategic road network.

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3 Economic Case

Explain how the proposal will

provide value for money, and

what is the basis for your

assessment?

A full webtag compliant cost benefit analysis has not yet been undertaken for

the scheme.

Nevertheless value for money will be achieved through not only the highway

elements and strategic connectivity that will be provided as part of the access

strategy for the new sites, but also and most fundamentally through the

economic advantage that unlocking the SAEG sites will achieve.

Provide a list of the options

that have been appraised?

(where applicable)

A number of options have been and are currently being explored including:

1. Do Nothing – this would not achieve the regional growth ambitions for

the SAEG sites, hence has not been pursued;

2. Delivery of an updated CLLR as a single scheme –the scale and

engineering complexities associated with the CLLR present significant

delivery challenges with associated high costs. The high costs are due in

part due to the complex nature of the scheme located adjacent to a live

railway line and the requirement for track closures and associated

compensation costs to rail operators due to the busy nature of the line,

hence this option is likely to be difficult to achieve in the short term;

3. Delivery of an updated CLLR as a phased scheme, with a southern

section coming forward as the initial phase – opportunities are

currently being investigated to bring forward access to the SAEG sites

south of the Botley line, based around an updated version of the southern

section of the CLLR. The modified scheme could include improvements

to Wide Lane bridge and Spitfire roundabout to the north of the M27

Junction 5 if feasible, however once again there are significant

engineering challenges and complexities associated with crossing the live

railway lines, which require further investigation. The precise scheme

details and extent of the improvements are currently being developed,

however, the scheme will aim to deliver a significant uplift in highway

capacity to future-proof the network and make it more resilient. The

scheme will achieve objectives that will facilitate new access to the SAEG

sites. It will also provide a ‘gateway’ to Southampton Airport enhancing its

status as a regional hub.

For transport schemes only:

Provide details and outputs

of a WebTAG Assessment

undertaken.

A full webtag assessment has not yet been completed.

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4 Financial Case

2016/17 2017/18 2018/19 2019/20 2020/21 Total

Local Private Sector

Contributions

£x tbc £x tbc £x tbc £ £ £tbc?

Local Public Sector

Contributions

£ £ £ £ £ £0

Local (other)

Contributions

£ £ £ £ £ £0

LGF Funding Request £xx £xxx £xxxxx £xxx £x £25-45m?

Total Project Costs £xx £xxx £xxxxx £xxx £x £25-45m?

Are local funding contributions

confirmed, and if not, when will

they be confirmed?

There are currently no local funding contributions confirmed. Contributions

towards the scheme cost could be sought from Southampton Airport

(improved access), and potentially other developers eg NR on the southern

SAEG sites. Contributions could be sought from Eastleigh BC as promoters

of the SAEG sites.

The potential for other local funding is likely to be limited however work to

identify opportunities in this respect will be investigated.

What are the key financial

risks?

Not fully known at this stage, however the following are likely to be key:

- crossing the main railway line presents significant risks which have

cost implications not least in relation to the requirement for railway

possession orders prior to any work on the line with associated high

compensatory costs;

- insufficient funding available to cover costs of scheme;

- 3rd party land not acquired through negotiation – need for CPO;

- Unknown statutory undertakers plant.

Has any sensitivity analysis

been undertaken on costs?

Cost estimates will be provided following ratification of scheme details

through completion of feasibility / preliminary design. Costs will be subject to

further analysis and refinement as the scheme progresses. A quantified risk

assessment will be undertaken and risks costed, optimism bias and

contingency will reflect the nature of risks identified and the stage in the

design process. A monte carlo simulation can be undertaken to provide a

sensitivity analysis.

Is the proposal compatible with

EU State aid regulations?

Yes – No specific new developments will be directly linked to it in terms of

delivery. Addressing an existing highway problem, albeit one that improves

access to certain sites, e.g. Airport, Riverside, Former Ford site

Any other information or

further comments on the

proposal not captured in other

sections of this form

Not known at this time.

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5 Commercial Case

Provide details of your

contracting and

procurement strategy?

It is currently anticipated that the works would be procured via the Generation 3 Civil Engineering, Highways and Transportation Infrastructure Works Framework 2016-2020 (GEN3). The GEN3 Framework was introduced in April 2016 with a number of selected contractors in the framework.

Framework contractors’ performance will be monitored using Key Performance Indicators (KPI) and other performance data. ‘Green’ performing Framework contractors are incentivised and tender submissions are weighted depending on current dashboard status. This mechanism provides an incentive for the Framework Contractors to maintain a high quality of work and standard of service whilst working for HCC. The GEN3 framework has been demonstrated to provide value for money and this procurement route is also most suitable for the proposed delivery timescales for the scheme, for instance when compared to the OJEU process which would extend the delivery programme significantly.

There are three different GEN3 framework levels which could be used dependent upon the nature and value of the works. Hence the exact part of the framework which will be used will need to be determined once the scheme costs are more precisely understood.

The GEN3 (2) Framework is available for use by HCC and other authorities across Southern England.

Please set out the key project risks in this table:

Risk

Mitigating Actions Contact

Responsible

Review

Date

RAG Rating for

Risk

Engineering complexities

associated with working

adjacent to and across main

railway lines;

Progress design to a stage

solutions are identified

Heather

Walmsley

tbc

Engineering complexities

associated with constrained

site and level difficulties

resulting in unacceptable

gradients and other

departures from standards;

Progress design to a stage

solutions are identified;

Detailed construction

methodology to be agreed

between all stakeholders.

Heather

Walmsley

tbc

Unknown NR constraints/

issues;

Work closely with NR to

understand issues.

Heather

Walmsley

tbc

Unknown Statutory

undertakings issues;

Seek early engagement

with Stats companies to

help inform design where

appropriate and undertake

Heather

Walmsley

tbc

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detailed investigations prior

to works commencing

The scheme which is most

feasible doesn’t achieve all of

the stated objectives;

Seek to adapt the design as

work progresses to

maximise benefits.

Heather

Walmsley

tbc

Prohibitively high scheme

costs and cost increases

Undertake value

engineering at the

appropriate stage in the

design process. Allowance

to be included for OB and

contingency.

Heather

Walmsley

tbc

Land acquisition requires

CPO

Allow appropriate time in

programme and cost risk

accordingly.

Heather

walmsley

tbc

Political intervention Liaise with relevant

authorities

Heather

Walmsley

tbc

Expected delivery start date (quarter / year)

Q1 2018/19 tbc

Current status of the scheme (feasibility / outline

design / detailed design)

Outline feasibility design stage

What consents are required, and are these in

place? If not, when will they be in place?

Planning Permission not required.

BAPA Agreement with NR completed and further NR

consents will be secured at the appropriate stage.

Third party land will be required and hence the need for a

CPO cannot be ruled out at this stage.

Ecological constraints have not yet been assessed.

Are there any constraints and dependencies, if

so, what are these?

Links to development start dates will be critically tied to the

completion of the access to the sites, hence trajectories

need to be aligned to the delivery of the access..

Key dependencies that are critical to the successful

delivery of the planned programme include:

Agreement with Network Rail;

Funding allocation / agreement in place;

Timely procurement of contractor;

Project appraisal (G3) approval by the HCC

Executive Member for Economy Transport and

Environment;

Acquisition of the land required;

The scheme requires possession of the railway lines to be

agreed with Network Rail (NR) and agreement also needs

to be reached regarding construction methodology and

geometrical design requirements that NR have.

The scheme requires land acquisition and early

negotiations / discussions have taken place with relevant

landowners. At this stage, it is not known whether a CPO

15

process will be required (although this will be advanced in

a parallel with ongoing negotiations to mitigate impacts on

timescales if it is required).

From an engineering perspective, the scheme is complex

due to the tight working space for construction due to the

proximity of live road and railway lines, which pose

significant constraints. As noted above there are

requirements for possessions of the railway line in order to

safely construct the new bridge.

16

6 Management Case

Who is the project

manager/client?

Heather Walmsley

Set out the key decision

points

HCC Exec Member for Economy and Transport (EMET) approval to progress

detailed design for preferred scheme

Funding Award confirmed.

Agreement with Network Rail over scheme design and construction

methodology.

HCC Exec Member for Economy and Transport (EMET) Project Appraisal

HCC Exec Member for P&R approval to commence negotiations to acquire land

CPO if required / Third party land acquisition.

Procurement of contractor./ Contract Award

Set out the key actions and milestone to enable delivery of this project

Action / Milestones Target

Completion

Date

Person

Responsible

Current Position

(Including risks /

mitigation if necessary)

Feasibility design 2016 Ongoing

Confirmation of scheme funding from LEP/DfT 2016? SLEP

Note: all dates below are subject to review

following funding confirmation hence are

indicative only at this stage

HCC EMET approval to progress design 2016 HCC

Agreement with Network Rail over scheme

details

2017 HCC

Third Party Land Acquisition / CPO process 2016/17/18 HCC

Construction methodology agreed with all

stakeholders

2017/18 HCC

Detailed design completed 2018 HCC

Agreement of funding contributions from

Private/Public sector

2017/18 HCC/others

Project Appraisal approved by HCC EMET 2018 HCC

Tender and Contract period 2018/19

Procurement of contractor 2018/19 HCC

Main construction works commence 2018/19

Construction complete 2020

17

Set out the

governance

framework that

will be in place

What is the

proposed

reporting and

approval process

The Hampshire County Council Executive Member for Environment and Transport has

overriding accountability for transport projects which are overseen by the Strategic

Transport Group. Beneath this, the design team working group and project working

groups will report to the Major Schemes Project board (Solent LEP area).

The Client Manager will chair a project co-ordination group comprising of representatives

from the relevant groups involved in scheme progression.

Approvals from NR will be sought alongside appropriate stages in scheme development.

18

7 Declaration and Checklist

The below declaration is an essential part of the application form and must be completed by all applicants.

Failure to complete the declaration will result in your application not being considered.

Do you have any existing business relationships with

the Solent LEP or Investment Panel members?

No

If Yes please give details:

Have you previously applied for any Solent LEP

funding?

Yes

If Yes please give details in the table below:

Organisation Name Date of Application Awarded (Yes / No)

Hampshire County Council Various Yes

Please confirm:

I will answer all questions on this application form

relevant to my application.

Yes

I have read and understood the information in the

relevant Guidance document and, to the best of my

knowledge, I am eligible to apply.

Yes

I declare that the information I will provide in this form

is, to the best of my knowledge, correct.

Yes

I understand that answers may be used in response

to Freedom of Information Act 2000 requests and

these will be released pending further consultation

with me.

Yes

I understand that, if successful, my application may

be made public with the exception of any information I

have indicated as commercial in confidence.

Yes

The level of Solent LEP grant funding requested is

within the threshold as published in the relevant

Guidance.

Yes

I understand that Panel decisions in relation to my

Full Application are final and there is no right of

appeal.

Yes

19

I declare that the information I will enter on this application form and submit in the accompanying

documentation is correct to the best of my knowledge and belief.

Applicant name

Hampshire County Council

Date of submission

12 May.2016

Name of Responsible Officer

Heather Walmsley

Signature of Responsible Officer

Heather Walmsley

Checklist

Have I filled in all sections of form Yes

Is LGD funding request over £1 m Yes

Have I signed declaration box Yes

Where you have responded "No" to

any of the above answers, please note,

your application will not be eligible for

consideration

Is this application seeking funding to

support an innovation project?

No

Where the response to the above is

"Yes" please refer to the separate call

for innovation projects, which will be

issued by Solent LEP in April 2016

The deadline for submission of applications to Solent LEP is 17:00 on Thursday 12th

May 2016

All submissions should be sent using this template to: pipeline@solentlep.org.uk.

Submissions received after this time and date cannot be considered.

20

Appendix A

Map showing the extent of the Southampton Airport Economic Gateway development site

21

Appendix B

Table 1: Plot size, floor space and job creation figures as outlined in the Southampton Airport Gateway Enterprise

Zone bid 2015.

Land Parcel within SAEG Development capacity figures - 2015 Enterprise Zone Bid

Job creation figures - 2015 Enterprise Zone bid

Land owned by Southampton Airport (20.6ha)

75,190 sq m 3,462

Land owned by Network Rail (7.96ha)

29,415 sq m 1,524

Totals 104,605 sq m 4,986

Table 2: Plot size, floor space and job creation figures as outlined in Eastleigh Borough Council’s Strategic Land

Availability Assessment, 2015.

Land Parcel within SAEG Development capacity figures - 2015 Enterprise Zone Bid

Job creation figures - 2015 Enterprise Zone bid

Land owned by Southampton Airport (20.6ha)

30% development capacity – 61,800 sq m 35% development capacity – 72,100 sq m 40% development capacity – 82,400 sq m

No assessment on job figures included

Land owned by Network Rail (9.7ha)

30% development capacity – 29,100 sq m 35% development capacity – 34,000 sq m 40% development capacity – 38,800 sq m

No assessment on job figures included.

Totals 30% - 90,900 sq m 35% - 106,100 sq m 40% - 121,200 sq m

Appendix C

____________________________________________________________________________________

22

Indicative Development Costs – Land owned by Southampton Airport and Network Rail

Advice has been sought from AECOM on the costs associated with the development of both land parcels. The

calculations below are preliminary and exclude the following costs; VAT, professional and legal fees, funding, site

purchase costs, developers profit and any abnormal costs (land contamination, floor alleviation measures etc.).

Floorspace figures are based on estimates provided within the Southampton Airport Economic Gateway Enterprise Zone

bid and are phased over a ten year period, which should be considered when making assumptions on the level of private

sector investment for the development of both sites.

Table 1: Estimated construction costs; land owned by Southampton Airport. The use split is based on the figures

provided in the Enterprise Zone bid but a 20% buffer has been incorporated into this to account for the potential for some

of the land to be utilised by Southampton Airport for ancillary maintenance, repair and overhaul (MRO) operations.

Headline figures Use Floorspace/ sq m

cost/sq m Estimated construction cost

20.6ha (206,000 sq m) – total plot size 75,190 sq m – developable land

B1(a) office (54%)

40,600 £1,80017 £73,080,000

B1(c) light industry (26%)

19,600 £700 £13,720,000

B2 MRO (20%)

14,990 £700 £10,493,000

Total 75,190 £97,293,000

Table 2: Estimated infrastructure and construction costs; land owned by Southampton Airport

Headline figures Costs

75,190 sq m – developable land for new buildings

£97,293,000

Allowance for estate roads £1,000,00018

30,000 sq m – general business park infrastructure not associated with buildings, estate roads and landscape buffers

Calculated at £100/ sq m = £3,000,000

Total: 105,190 sq m + £101,293,000

16&17 this assumes that a good quality business park will be developed of four storeys to cat A standard. Light industrial development costs also assume a similar standard of construction but does not include internal fit out costs. 18

This is based on internal estate roads.

23

Table 3: Estimated construction costs for the land owned by Network Rail.

Headline figures Use Floorspace/ sq m

cost/sq m Estimated construction cost

7.96ha (79,600 sq m) – total plot size 29,415 sq m – developable land

B1(a) office (57%)

16,770 £1,80019 £30,186,000

B1(c) light industry (43%)

12,645 £700 £8,852,000

Total 29,415 £39,038,000

Table 4: Estimated infrastructure and construction costs; land owned by Network Rail

Headline figures Costs

29,415 sq m – developable land for new buildings

£39,038,000

Allowance for estate roads £500,000

10,000 sq m – general business park infrastructure not associated with buildings, estate roads and landscape buffers

Calculated at £100/ sq m = £1,000,000

Total: 39,415 sq m £40,538,000

Total estimated construction and infrastructure costs for both parcels of land:

£101,293,000 (Southampton Airport) + £40,583,000 (Network Rail) = £141,876,000

There are additional costs associated with the provision of utilities (electricity, gas and drainage) for both sites. Based

on schemes of a similar size and nature, costs could be in the order of between £5-20m.

24

Appendix D

Estimated job numbers and GVA for the redevelopment of the former Ford site.

The table below is based on an estimate of 60% B8 (warehousing and distribution), 20% (B2) general industrial and 20%

B1 (business) uses. Please note that as the planning application has not been submitted yet the exact breakdown of

uses on this site is unknown.

Table 1: jobs and GVA Jobs Output (GVA)

Gross 690 £39,900,000

Net 630 £34,500,000

NET ADDITIONAL 420 24,700,000

(of which INDIRECT) 90 £5,000,000

DIRECT 330 £18,200,000

Residential (Gross**) jobs 0 n/a

UseClass Gross m2

B1 9,040

B2 9,040

B8 27,118

A2 0

A1 0

C 0

D 0

25

Note: unrounded data

Table 2: Jobs Summary by occupation Gross NET

NET

ADDITIONAL

(of which

INDIRECT) DIRECT

Managers, Directors and Senior Officials 1 92 84 56 12 44

Professional Occupations 2 110 102 68 15 53

Associate Prof & Tech Occupations 3 95 88 59 13 46

Administrative and Secretarial

Occupations 4 74 67 45 10 35

Skilled Trades Occupations 5 93 87 59 13 46

Caring, Leisure and Other Service

Occupations 6 18 16 10 2 8

Sales and Customer Service Occupations 7 75 66 44 9 35

Process, Plant and Machine Operatives 8 53 50 34 8 27

Elementary occupations 9 76 67 45 10 36

Total 1-9 685 628 421 91 330

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