Appendix G: Payments in lieu calculations

Employment and Skills

Construction phase

i)    Apprenticeships starts

Shortfall against target number of apprenticeship starts 
X (multiplied by)
£26,000 (the average net cost to employers in delivering an apprenticeship at Level 2 and 3)

ii)    Job placements

Shortfall against target number of job placements 
X (multiplied by)
£3,417 (the average cost per job placement)

iii)    School and College engagement

Shortfall against target number of days activities  
X (multiplied by)
£1,919 (the average cost of arranging 1 meaningful encounter for every pupil by the end of Year 11)

iv)    Local employment

Shortfall in the target of 20% of jobs (including apprenticeships) filled by local residents in Greater Cambridge
X (multiplied by)
£6,500 (the cost of employment support)

G.1. Target construction outputs (i)-(iii) will be calculated using benchmarks from the Construction Industry Training Board (CITB) National Skills Academy for Construction (NSAfC) Project Based Approach. In Greater Cambridge, the outputs of benchmark KPI2 (Jobs Started by NSAfC Projects) are expected to be apprenticeships.

Operational phase

v)    Supported employment

Shortfall in the number of supported employment places for local resident to be provided by the development.
Target Supported Employment to be calculated as follows:
SE = A X (multiplied by) B X (multiplied by) C

Where:

A.  Is the number of jobs, including apprenticeships, estimated to be created during the Occupation phase (calculated using the employment densities included in Greater Cambridge Employment and Housing Evidence Update 2023 – Iceni Projects Ltd)
B.  Is 67.8 % (the percentage of Greater Cambridge residents expected to be employed as part of the workforce)
C.  Is 5% (the percentage of Greater Cambridge working age residents who are unemployed or economically inactive but wanting to work)

In-lieu calculation

Shortfall in Supported Employment target (SE) 
X (multiplied by)
£6,500 (the cost of employment support)

G.2 All the costs contained in the formulae, will be reviewed annually by the councils and will be subject to appropriate indexation, to ensure that they remain appropriate to cover costs.

Affordable workspace

i)    Affordable Workspace Value (£m) =

Total net additional floorspace (sq. ft NIA) 
X (multiplied by)
Proportion of floorspace which should be affordable (10% in accordance with the policy)
X (multiplied by)
Market rent (£ per sq. ft) 
X (multiplied by)
i.  Affordable rent discount (% in accordance with the policy)
/ (divided by)
ii.  Market Yield (%)

A.  Total floorspace (NIA sq. ft) refers to the net additional employment floorspace created by the development. – Taken from the approved development proposal and entered by the applicant. [Applicant input]

B.  Proportion of floorspace to be provided as affordable workspace (%) – Fixed policy requirement. The percentage will be applied in accordance with the affordable workspace policy. [Fixed policy input]

C.  Market rent (£ per sq. ft) – The market rent that would reasonably be achieved for the relevant type of employment space, evidenced through comparable transactions for similar size, specification and location. [Applicant input, subject to Council review]

D.  Affordable rent discount (%) – Fixed policy requirement reflecting the level of affordability to be secured. The applicable discount will vary by development type and location in accordance with the affordable workspace policy. [Fixed policy input]

E.  Market Yield (%) - Calculation of the rate of return an investor would expect to receive from a comparable market employment floorspace property based on its income and capital value, evidenced through recent investment transactions or professional valuation evidence for properties of a similar use, size, specification and location. The yield should be expressed as a Net Initial Yield (NIY) and should be derived independently from the market rent assumption. [Applicant input, subject to Council review]