BiFab: intervention analysis

Economic Appraisal: Benefit Assessment – Employment

Step 1: Strategic Benefit

The provision of a loan to BiFab was intended to deliver short term security to employment for BiFab staff. At the point of the first intervention, it was considered that without the loan, employment would be terminated. It was estimated that direct employment at BiFab was circa 1,400 employees at this point, which helped support a further 400 to 800 employees in the Scottish economy.

Step 2: Theory of Change

i. Strategic Driver

BiFab is close to administration, which would result in job termination

ii. Intervention

Provide loan to BiFab to prevent firm going to administration

iii. Enabling Change

This provides short-term security for employment

iv. Outcome

Direct jobs are protected

v. Impacts

Maintains jobs in wider supply chain

Maintains employment in high productivity roles

Step 3: Achievement of benefit

• Employment was maintained as part of the investment, thereby preventing short-term unemployment and protecting high value jobs.
• During the first six months of 2018, between 600 and 1,100 agency jobs were protected during the completion of the BOWL contract.
• For the majority of 2018, 2019 and 2020, it appears that 252 permanent jobs were protected.

Approach to monetising benefit and counterfactual case

• Determine number of jobs protected at BiFab between 2018 and 2020.
• Calculate indirect and induced employment effects as a result of this protection.
• Estimate number of employment impact in the counterfactual case.
• Compare the employment position between the actual and counterfactual case to estimate total employment impact.
• Calculate GVA impact of jobs protected.

Step 4: Review the additionality of the intervention

• The result of the intervention is that employment was protected in the short term. While agency workers appeared to fall with the completion of the BOWL contract, 252 permanent jobs appear to have been protected for the majority of the period. In the liquidation and managed administration case, we have assumed this employment would not have been protected. The effect of this is that the intervention helped create additional GVA in the periods where those employees would have been unemployed.
• In the counterfactual case we have also assumed that when employees return to work they return to less productive roles, the impact of which is lower GVA per employee and lower total output produced in the economy. This means that the intervention helped maintain additional output levels through maintaining employment in more productive roles. Lastly, the impact of maintaining employment in more productive roles is that the spill over effects in the economy are greater and therefore additional employment levels are higher. The intervention helped maintain a higher level of output in the Scottish Economy and therefore protected jobs in the wider supply chain.
• Manufacturing employment declined significantly between 2017 and 2019 in Scotland and there were also significant declines in Fife between 2018 and 2020, indicating the intervention may have had particular value to employment in Fife. For Eilean Siar (the location of the Arnish site), as is characteristic of the Highlands and Islands economy, the unemployment rate is below the national average. Manufacturing employment there rose between 2018 and 2020, suggesting that the employment market was comparatively stronger in this region.
• We therefore estimate that the intervention helped protect between £23.0m and £35.0m of GVA across the three years. For the liquidation case, it is estimated that the intervention case helped protect £35.0m of GVA, with £23.6m of this related to direct employment, £5.6m related to indirect employment and £5.8m related to induced employment. For the Managed Administration case, it is estimated that the intervention helped protect £23.0m of GVA, with £15.5m related to direct employment, £3.5m related to indirect employment and £3.9m to induced employment.