Speeches Scottish Parliament




City Region Deals  

27 March 2018

City-Region Deals 27 March 2018 If the 19th century was the age of empires and the 20th century was the era of nation states, the 21st century will see cities and regions that achieve a critical mass of creativity and productivity as the drivers of the global economy.

That is not just my view, but the view of many economists who inform public policy around the world.

This Parliament was born on the threshold of the new century, and from the beginning it has recognised the importance of city regions as drivers of Scottish economic growth.

That approach has had cross-party support from the outset and it is reflected in Scotland’s national planning framework.

Scotland’s city region deals and the city deals in northern England are not brand new, but they reflect a growing view that investment in critical infrastructure brings social as well as economic benefits.

A city or region that is physically and virtually connected can play a much larger role in the global economy, to the benefit of all its citizens.

That is why city region deals matter and why it is so important to get them right.

Labour welcomes the committee report’s focus on key questions, and it recognises that it is early days in the development of city region deals.

It is critical to their success that they deliver for everyone.

As Keith Brown said today and in his response to the committee:

“autonomous, democratically elected local authorities”

must be

“at the centre of design and delivery of all growth deals.”

That autonomy is important.

Councils are not the agents of central Government either here or elsewhere, but democratically elected, so their accountability can help to ensure that economic growth is inclusive, and autonomy is the best defence against exploitative work practices in projects that are funded by this means.

Councils and their local partners should take the lead in the design of schemes, including the selection of projects, while ministers, of course, should have stewardship of the public funds that they have contributed.

Local government best reflects the views of communities on local priorities, as Claire Baker said so clearly.

The delivery of projects will inevitably vary from deal to deal, depending on the partners and the agreed delivery model.

Local authorities are bound to be key partners in delivery as well as in design, and their accountability and permanence makes them the right public bodies to lead delivery in most circumstances.

As James Kelly mentioned, Aberdeen City Council in my area has taken a particularly innovative approach to finance by raising a substantial bond by its own hand.

The committee is right to argue for transparency and accountability in city region deals, and we support the proposition that all parts of Scotland should have the benefit of growth deal investments

It is equally vital that each deal should develop in the way that is best suited to its city region.

Bob Doris opened the debate by saying that the Glasgow and Clyde Valley deal is well under way while others are at various stages of development.

I have good news for him: the Aberdeen city region deal is also well under way and, in fact, is at a very advanced stage.

To take one example, the oil and gas technology centre that was set up under the city region deal has already co-invested £37 million in more than 70 projects during its first 12 months and, only this week, the Oil & Gas Technology Centre and the University of Aberdeen announced a new multimillion pound centre of excellence in oil and gas decommissioning, which will be operational later this year.

Work is pressing ahead, which is significant.

One important aspect of the Aberdeen deal that was mentioned as an area for improvement across the board is the engagement of the private sector, in partnership with the public sector, and the alignment of investment and support from a range of partners.

For example, the figure has been mentioned today of a capital value of £826 million arising from the Aberdeen city deal, but, as the cabinet secretary mentioned, £250 million of that is direct support from the Scottish and UK Governments.

Much of the rest is provided or leveraged in by Aberdeen City Council, Aberdeenshire Council, the University of Aberdeen and Robert Gordon University, and the private sector is critical to its success.

The debate is timely in that last night the annual general meeting was held of the private sector partner in the Aberdeen deal, Opportunity North East, which is just over two years old.

Having already committed £29 million over the first five years of the city deal, Sir Ian Wood announced additional funding through ONE of £33 million, on the condition that that is match funded.

I hope that the cabinet secretary will be in a position today to confirm that that private sector offer will not be lost and that the investment will be match funded, because the Scottish and UK Governments should take the opportunity to step up to the plate, secure the additional millions of pounds and provide even greater benefits to the Aberdeen city region economy.

When the Aberdeen deal was signed in 2016, it included a commitment to a transport appraisal, which was supported by the Scottish and UK Governments and local partners, to

“take a 20 year strategic view of the transport implications of the investment”

under the deal,

“across all modes including road and rail.”

Does the Scottish Government intend to develop a second city region deal for Aberdeen—David Stewart mentioned that in the context of Inverness; of course, Glasgow’s is already well established—and does it intend to build on existing city region deals around Scotland?

Keith Brown:

Lewis Macdonald would probably concede the point that we are duty bound to ensure that there is a deal for everywhere in Scotland before we start talking about a second tranche.

Does he acknowledge the extra £254 million that has been committed by the Scottish Government on top of the £250 million that he mentioned for transport-related projects?

Lewis Macdonald:

Absolutely—I acknowledge both points.

On the first point, the cabinet secretary is right to make his commitment, which will be welcome across Scotland, to develop initial city region or economic growth deals around the country.

However, there nothing to prevent work taking place now to put the second-stage deals in place at the appropriate time, on the back of the commitments made under the existing city region deals.

I hope that the cabinet secretary’s comment does not imply that he does not intend to do that.

In relation to the additional £254 million for Aberdeen that Mr Brown mentioned, he will recall that, at the time of its announcement, its purpose was said to be to replace the short but economically calamitous stretch of single-track railway on the east-coast line between Aberdeen and Edinburgh, which has a hugely negative economic impact on the north-east economy.

That stretch of track at Montrose will be expensive to fix, but it needs to be fixed if the full benefits of the city region deal are to be achieved.

I hope that the cabinet secretary will be able to confirm today that the Government intends to deliver on that specific objective and not to divert the funding that has been identified for that purpose to journey-time-saving measures elsewhere on the railway network.

In the same spirit of things going forward together, Mr Brown will be aware of the work that is going forward right now on an oil and gas sectoral deal, and that there are other sectoral deals being addressed and explored.

They have great potential to bring further benefits to the north-east in particular and to Scotland in general.

I ask Mr Brown to indicate how he sees sectoral deals, as they develop, dovetailing with city region deals, including new deals in new areas and second-generation deals in areas in which deals are already established.

City region deals have created new opportunities.

We need to develop them further if we are to make the most of the potential that they offer.

If, in working with partners, the Government is willing and able to do that, it will have support from parties across the chamber.