Economic impact of infrastructure projects

Meeting: 
MQT on 2015-09-16
Session date: 
September 16, 2015
Reference: 
2015/3053
Question By: 
Fiona Twycross
Organisation: 
Labour Group
Asked Of: 
The Mayor
Category: 

Question

What is the multiplier ratio currently associated with big infrastructure projects such as Crossrail and Crossrail 2?

Answer

Answer for Economic impact of infrastructure projects

Answer for Economic impact of infrastructure projects

Answered By: 
The Mayor

A number of appraisal metrics are used for major transport infrastructure projects, to help better understand their benefits and impacts. The term 'multiplier ratio' is typically used to refer to the additional jobs or economic activity that is generated as an indirect consequence of an investment.

For large transport infrastructure projects such as Crossrail and Crossrail 2, the direct benefits come from journey time savings, which makes the economy more efficient, as well as from large numbers of jobs created in the construction of the scheme. But they also have very large indirect impacts from enabling new housing and employment, which generate new levels of economic activity and jobs associated with additional local income and supplier purchases. The scale of these wider benefits will vary from project to project, depending on the amount of new housing and employment development that they help to enable. This is usually assessed by considering the physical potential of the type and scale of development that could come forward in the places in which a scheme will serve.

It is estimated that Crossrail 1 will support the creation of an additional 63,000 jobs within the City of London and Canary Wharf, support 33,000 jobs in the rest of London including the West End and 85,000 jobs in the Thames Gateway. Across London and the South East, it will generate £42billion of Gross Value Added (GVA). Crossrail 2 is estimated to support the creation of 135,000 additional jobs in the Central Activities Zone (CAZ) and a further 70,000 jobs along the route. This will generate up to £102billion of GVA for the UK economy.