Worker Accommodation Economic Impact Assessment

BiGGAR Economics was commissioned by Mull and Iona Community Trust (MICT) to assess the benefits to the local economy of investing in, and delivering, accommodation for workers on the islands.

Background

The economy of Mull and Iona is severely constrained by a shortage of accommodation for workers. In 2021, MICT commissioned research to investigate the extent of this shortage and identified a need for accommodation for 260 existing and incoming workers.

Following this, BiGGAR Economics was commissioned to assess the medium and long term benefits to the local economy of investing in, and delivering accommodation to fill this gap.

Quantifying the Impact

To quantify the impact of the accommodation shortage, BiGGAR Economics drew on evidence gathered by MICT and undertook a series of consultations with affected businesses and organisations.

We identified that the accommodation shortage is stifling economic activity on the islands by harming both the scale of business operations and productivity levels.

We found that if the unmet demand for worker accommodation is fully addressed, then in 20 years the islands could be generating £20.1 million GVA/year more for the Scottish economy than they would be if no action is taken. We also found they could be supporting nearly 400 more jobs.

In 20 years, this could increase the size of the island’s economy by £20.1 million GVA/year and nearly 400 jobs.

In addition, we found that the beneficial effects of action would not be purely financial. Social returns could be equally transformational. The importance of a dynamic labour market populated by innovative and enthusiastic young people cannot be underestimated, particularly on an island.

It could be a catalyst for social regeneration that could breathe new life into communities, give young people a reason to remain on the islands and helping Scotland build a thriving wellbeing economy.

Why this Matters

Our analysis showed that MICT could play an important role in helping to address two particular sources of demand that neither the public sector nor the market is well-placed to respond to:

short-term accommodation suitable for seasonal and temporary workers; and
temporary “stepping-stone” accommodation for workers moving to the islands for a short period while they find a home

Demand for this type of accommodation is unproven and likely to be unpredictable so investment may be unattractive to private housing developers. Social housing is also unlikely to address the gaps in provision because it allocates properties based on housing need, which is difficult to demonstrate for people who do not yet live on the island.

While in the past businesses may have stepped into to meet demand, the increasingly high standards expected by staff coupled with the high opportunity cost of investment are likely to make this an unsustainable long-term option.

Without intervention the market alone is unlikely to deliver a socially optimal result. This creates a potentially important role for third sector bodies, like MICT. Being “on the ground,” MICT has an in-depth understanding of the needs of businesses on the islands that is difficult for an outside provider to replicate.

Worker Accommodation Economic Impact Assessment

Background

Quantifying the Impact

Why this Matters

Further Reading