City Region Deals

– in the Scottish Parliament on 27th March 2018.

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Photo of Christine Grahame Christine Grahame Scottish National Party

The next item of business is a debate on motion S5M-11230, in the name of Bob Doris, on “City Regions: Deal or No Deal?”. I call Bob Doris to speak to and move the motion on behalf of the Local Government and Communities Committee. You have a generous 12 minutes, Mr Doris. How often do you hear that?

Photo of Bob Doris Bob Doris Scottish National Party

Thank you for your generosity, Presiding Officer, and for the opportunity to open the debate as the convener of the Local Government and Communities Committee. The title of the debate and of our committee report is “City Regions: Deal or No Deal?”, but do not worry, Presiding Officer; I assure you that Noel Edmonds will not appear at any point during the debate. However, lots of important information will be put on the record.

The fairly recent growth in the number of and budgets for what are known as regional economic partnerships, which incorporate city region deals and growth deals, sparked our interest in this important area. The committee wanted to look at the rationale, the prioritisation and the value for money in relation to city region deals, including the progress to date of the deals in delivering job creation and economic growth. We also wanted to examine the structure and governance of city region deals throughout Scotland.

Why are city deals important? They were launched in Scotland in July 2014 during the intense debate on Scottish independence. One major deal is well under way in Glasgow and the Clyde valley. There are three further deals, at various stages of progress, in Aberdeen and Aberdeenshire, in Inverness and the Highlands and in Edinburgh, Fife and the south-east. Developments are under way towards a deal for Stirling and Clackmannanshire and the Tay cities. There are also fairly tentative steps towards other possible initiatives and regional growth deals, such as the possibility of an Ayrshire or Borders deal.

Significant sums of money from the Scottish and United Kingdom Governments, as well as contributions from local authorities, underpin the deals. For example, the Glasgow deal is worth £1.1 billion over its lifetime, with 20 major infrastructure projects across the region, which include roads, bridges and improved transport infrastructure, quay walls, remediation, construction, public realm works and assistance with further capital investment for housing, retail and commercial purposes. There is a heck of a lot in there. However, are the deals logical, consistent, rational and good value?

To date, 83 per cent of Scotland’s population—4.5 million people—live in the areas that are covered by existing or planned city region deals. Crucially though, some parts of Scotland currently miss out. Our inquiry was the first time that the Scottish Parliament has looked in any depth at city region deals as a package, and it was important to do so.

We wanted to receive answers to the following questions. What are people’s perceptions of the purpose of city region deals? Are city region deals in Scotland on track to deliver local growth, innovation and infrastructure schemes that would not otherwise have been delivered? How well developed are the governance arrangements for city region deals, and how well are those arrangements working in practice? How much local consultation and engagement goes into the design of the deals, and were local residents and businesses kept informed and involved in the development and activities of said deals? What will be put in place in the regions and areas of Scotland that are not covered by city region deals, and how do those areas access equivalent funding and support for growth, innovation and infrastructure schemes? Finally, do city region deals support a shift towards local decision making on major investment projects?

The committee’s report is substantial. It took nine months for the committee to deliberate on the questions, and we heard from more than 20 witnesses and received nearly 40 written submissions. We also visited Glasgow airport and held a public engagement event with local people and businesses in Ferguslie Park in Paisley as part of our work. I am grateful to all the people who helped us with our inquiry.

The outcome of our inquiry was a unanimously agreed report that was published in January. It is fair to say that the report has been welcomed and well received, with positive feedback from professional bodies and other interested groups and positive replies from the Scottish Government to most of our recommendations. We wrote to Glasgow City Council during our inquiry, given that its particular deal was the most advanced, and we have had positive replies from that council. Unfortunately, despite writing to Lord Duncan and the Scotland Office, a reply has not yet been received, which is a shame. Although we anticipate that we will receive a reply by the end of this week, it would have been helpful to have had a reply in time for this significant debate. However, we look forward to working constructively on the matter with the Scottish and UK Governments.

I turn to the report’s main conclusions and recommendations. I am sure that, in general, my fellow committee members welcome the city region deal initiative. They are important projects that have the potential to transform our towns, cities and rural areas through the improved and inclusive economic growth that the increased investment is designed to bring. However, we found that city region deals were part of an

“often confused and cluttered policy landscape at local government, Scottish and UK levels”, which

“runs the risk of reducing the impact that can be achieved from the deals.”

That is why our first recommendation was on how the UK and Scottish Governments work together. Can they agree a shared and single purpose for the deals? Can they work closely together to maximise the benefits of the sums of money that both will commit to the projects?

The need for close working between the Governments manifested itself during our inquiry in two main ways. First, we heard evidence that too much emphasis is being placed on which projects are in devolved areas and which are in reserved areas. That seemed to many—me included—an artificial divide, when the central purpose is economic growth. The committee had some sympathy for that view.

There was also debate on what form of economic growth is desirable. For some who gave evidence, the UK Government’s singular focus on pure economic growth—the biggest bang for our buck—was inconsistent with the Scottish Government’s objective of inclusive growth. Although the committee did not take a view on which form of growth should be pursued, we sought clarity from both Governments on how they will work together with a single focus to deliver economic growth.

That said, the committee welcomed the reprofiling and revisiting of the Glasgow deal to incorporate more aspects of inclusive growth. Indeed, in that respect, I welcome the response to our report from Glasgow City Council leader Susan Aitken. In doing so, though, I must declare a constituency interest, as the member for Glasgow Maryhill and Springburn. In Councillor Aitken’s letter, she talks about developing inclusive growth, and the commission on economic growth leading

“an innovative pilot exercise relating to the Glasgow Canal and North City Deal Infrastructure Project.”

She goes on to say:

“Learning from this will be applied to other City Deal projects.”

She mentions her reply to Graham Simpson during an exchange in the committee, when she said:

“the team in Glasgow is absolutely looking at not only the projects in the city region deal but at projects in a wider context.”—[

Official Report, Local Government and Communities Committee

, 8 November 2017; c 9.]

The letter from Councillor Aitken also talks about complementary funds, the use of underspends, unexpected factors and potential new funding becoming available.

Why am I saying all this? It is not just because it relates to my constituency. Wherever we are in the country, members will want to know whether just one area will benefit. In my constituency, it might be Sighthill. If projects are reprofiled and changed, will that affect the likes of Port Dundas, Hamiltonhill, Maryhill, Cadder and Lambhill, all of which are connected by the canal in my constituency? Moving away from my part of the world, there are MSPs here from right across Scotland, and they should know what the approach means for their areas, and how communities will be consulted on projects.

The committee was also concerned about the process of project selection in the deals. Who decides what gets funded, and how open and inclusive a process is that? As far as we can ascertain, projects in any given deal are selected by the local government partnership and then presented to the Scottish and UK Governments for evaluation and assessment. That leads to a selection of those projects being agreed to as part of any deal. That can lead to confusion and finger pointing when some projects are prioritised and others are not.

The process is also supposed to involve local consultation and engagement. The outcome of our extensive inquiry was that we were not at all clear that

“there has been or still continues to be any significant engagement with local businesses, charities, community bodies etc. at the project identification stage.”

In short, the process of deciding what gets funded is too opaque and too top down; it needs to be opened up and made more transparent, with real and sustained engagement with local people and businesses. The process also needs to pay proper attention to equality and sustainability assessments. Local communities—and, indeed, local MSPs—need to know why certain projects were selected while others were not. That is important for transparency.

The third main area of our recommendations relates to the need for rigorous on-going monitoring and evaluation of individual projects and the deals. One concern that was expressed to us was that some deals or projects would simply displace investment and job creation from other parts of that region or from other regions in the country. That would mean that, although the parts of Scotland that are covered by city deals might benefit, other parts might simply lose out.

That is why the committee sought assurances and made recommendations on how projects and deals are monitored. We want the risk analysis for projects and deals to be made more publicly available for all to see and scrutinise. We sought assurances that, as time progresses, we can learn from our experiences, in what can sometimes be a 10 to 20-year development, and adapt accordingly. That means having the ability to revisit the original deals and refocus them. That has happened in Glasgow, with the new focus on inclusive growth there. I went into detail on what that could mean in my part of the city.

The last area in our conclusions is what is on the table for the parts of Scotland that are not currently benefiting from investment of this type. Scotland Office minister Lord Duncan suggested colouring in “the mosaic of Scotland” so that every part

“should receive the benefits irrespective of whether it is an urban area, near an urban area or there is no urban at all in that area.”—[

Official Report, Local Government and Communities Committee,

22 November 2017; c 17.]

In short, no part of Scotland should be left behind. We support that principle, but it must be put into practice.

In the Scottish Government’s response to our report, it agreed and stressed that doing so requires a commitment to invest and the publication of a clear timetable by both Governments for the parts of Scotland, such as Ayrshire, that are not part of the current process and that, as yet, have no clear timetable for a growth deal. I am sure that my colleagues Willie Coffey and Kenny Gibson will cover that situation during the debate.

I again thank all those who helped us with the inquiry. I thank my fellow committee members for their work as well as the clerking team, including Jane Williams and Stephen Imrie, for their wider support of our deliberations. This is the first time that the committee and the Parliament have looked at city region deals in any depth, but it will not be the last. Billions of pounds of public money is being invested. In these straitened financial times, that cannot be allowed to be spent without the on-going scrutiny of the Parliament and its committees. Our committee is well placed to do that, given our absolute and overriding brief to protect communities the length and breadth of Scotland. We will continue with that scrutiny. This afternoon, we look forward to hearing the views of other MSPs to aid and abet us in our on-going scrutiny.

I move,

That the Parliament notes the findings and recommendations in the Local Government and Communities Committee's 1st report, 2018 (Session 5),

City Regions: Deal or No Deal?

(SP Paper 254).

Photo of Keith Brown Keith Brown Scottish National Party

Bob Doris has covered a range of the important recommendations made by the committee in its report on the inquiry that was conducted into city region deals in Scotland. It is worth mentioning that that committee investigation also included the first time that United Kingdom and Scottish Government ministers have given evidence to a Scottish Parliament committee at the same time.

I read the recommendations in the final report with great interest. The report is helpful and it highlights a range of significant issues for all partners to focus on as we go forward with this work. I have submitted a written response to the recommendations in the report and look forward to engaging with the committee further on the matter.

City region deals represent an important catalyst in helping to drive the achievement of inclusive growth in Scotland. For our part, the Scottish Government has committed over £1 billion pounds to the three city region deals that are already agreed. We hope to complete a city region deal for Edinburgh and the south-east of Scotland and to agree heads of terms for deals involving the Tay cities, Stirling and Clackmannanshire and the borderlands.

It is important to be clear that those deals are a relatively new part of the economic development landscape. For that reason, they need to be given time to mature before a body of credible evidence on their positive impact can be assembled.

The Scottish Government is committed to growing Scotland’s economic prosperity in a way that ensures that every region and local community can benefit from new opportunities while inequality is reduced in tandem.

As Bob Doris said, current and future growth deals are only one means of making our vision for inclusive growth a reality across Scotland. In the phase 2 report of our enterprise and skills review, which was published last year, we made it clear that the economic power and potential of Scotland’s distinct regions must be harnessed. To ensure that that potential is realised, we are working to enable further development of a network of regional economic partnerships covering Scotland. All the catalytic growth deal activity that we already support and want to support in the future sits within that overall policy and operational context.

The committee’s report made a number of recommendations linked to the working relationship between the Scottish Government and the UK Government. To be clear—and to address one of the points Bob Doris raised—the Scottish Government is committed to 100 per cent coverage of Scotland with growth deals. I want to be equally clear that we want the UK Government to declare that it will join us in common purpose on that. In line with a recommendation that was made in the committee’s report, I am keen to agree a timetable with the UK Government for the roll-out of growth deals covering every part of Scotland as soon as possible. I will press that matter with the Secretary of State for Scotland when I meet him later this week. Early agreement of a timetable would provide reassurance to partners in areas such as Ayrshire who have been working hard to frame the content of a full growth deal.

The committee’s report raises important points about the relative economic strategies of both Governments. I want to avoid being detained by technical or semantic arguments about our respective high-level economic development policies, but it is my belief that the achievement of inclusive growth to enable a more equal society in Scotland and across these islands should be a unifying goal for all Governments.

The report recommends that both Governments work with Her Majesty’s Treasury to agree a system whereby the focus of joint effort is on funding the deal and its constituent projects, not on what the report describes as the

“artificial boundaries of what is a reserved project and what is a devolved one and the badging of who is funding what.”

That recommendation is eminently sensible. It is also true to say that that vision was not evident in the earliest city deal that we became involved in—the Glasgow city deal. Joint investment in high-quality, locally developed projects will accelerate economic growth in a way that improves regional prosperity while reducing inequality. That is the sort of outcome that I would have thought that any Government would prize.

The report highlights the range of programmes in Scotland that are aimed at growing an inclusive economy. Our economic ambitions and priorities for the enterprise and skills system have been clarified over the past couple of years. Although we always seek to be nimble and creative in refining our plans, I do not think that the development of a new economic strategy is necessary at the current time. However, with the looming threat to the Scottish economy from a hard Brexit, we will remain vigilant and focused on protecting Scotland’s future prosperity and wellbeing.

Of course, Scotland’s regions are varied in terms of the economic opportunities that they offer and the challenges that they face. A network of regional economic partnerships exists in a variety of forms and degrees of maturity across Scotland. I should make special mention of the three Ayrshire authorities that have come together in a far-sighted way to create that cohesion in relation to an Ayrshire growth deal. Governance arrangements that are attached to the city region deals are beginning to influence the way in which partners are engaging in the wider regional policy context. Essentially, those new partnerships offer an opportunity for local authorities and their regional partners to explore beneficial reform ideas that can make conditions for inclusive growth more favourable.

Before I finish, I will comment on some other themes that were highlighted in the committee’s report, with particular regard to investment project selection and governance. Linked to those areas, there is a central point that I would like to emphasise, which I emphasised when I appeared before the committee. Autonomous, democratically elected local authorities are at the centre of the design and delivery of all growth deals. Working with partners, they are the best arbiters of what action will drive the regional economy with fresh vigour. We would expect them to seek to build a consensus among all local stakeholders including, as Bob Doris suggested, the business community and local people. We have continually put that case to the various city region deal partners, and I know that the UK Government has also reinforced that message. That means of connecting with stakeholders can and should be enabled by the regular processes that are employed by local authorities, all of which will also be clear about their duty to promote equality.

The aim of generating inclusive growth is the golden thread running from our economic strategy, through our enterprise and skills ambitions, to work on the ground in those regional partnerships that are being inspired by the city region and other developing growth deals. The Scottish Government is grateful for the committee’s inquiry and the recommendations in its final report. I have responded in writing but, as Bob Doris has made clear, that was the start of a process of continued dialogue. I look forward to updating the committee and Parliament on further progress with city regions and, indeed, other regional growth deals and regional economic partnerships.

Photo of Graham Simpson Graham Simpson Conservative

The Local Government and Communities Committee has done important work in my time as a member of it, and our investigation into city region deals certainly fell into that category. It came about mainly because of the concerns voiced by me and the convener about how the Glasgow city deal was being run, but we did not restrict ourselves to that deal.

City region deals or growth deals—members can call them what they want—have the potential to deliver fantastic economic and other benefits to the areas that they cover. The deals and potential deals in Scotland show the prospects for the areas that will be affected.

The Aberdeen city region deal has funding of £826 million over 10 years for investment in an oil and gas technology centre, an agri-food and nutrition hub for innovation, a biotherapeutic hub for innovation, digital connectivity and harbour expansion.

The Inverness and Highland city region deal, which is also spread over 10 years, is delivering funding of £315 million. It will establish a north innovation hub to develop Inverness castle as a key tourist destination, support commercialisation and deliver an innovative approach to assisted living. It will also invest in broadband and mobile coverage, road infrastructure and the provision of 6,000 homes.

The Edinburgh and south-east Scotland city region has received £1.1 billion from the Government. Up to £350 million is for a research, development and innovation programme that will include data centres, incubation space, industrial and commercial space and the food and drink innovation campus at Queen Margaret University. There is £140 million for crucially needed improvements to the city bypass at the Sheriffhall roundabout, which Gordon Lindhurst will say more about; £20 million for a new concert hall; £25 million for a regional skills programme to support improved career opportunities for disadvantaged groups—I guess that that is the inclusive growth that the cabinet secretary spoke about; and £65 million for housing to unlock strategic development sites.

Scotland’s first city deal was for Glasgow, which I will come on to. Our inquiry highlighted problems there that others, including the UK and Scottish Governments, should avoid in the future. We found that the system for choosing projects has been top-down and does not engage with local people. Particularly in the Glasgow deal, projects were done to people and not with them. We want to see more evidence of meaningful engagement with local businesses and the private sector more generally as well as with charities, community groups and local people.

Photo of Keith Brown Keith Brown Scottish National Party

I understand Graham Simpson’s point, but does he recognise that the Glasgow city deal had no engagement even with the Scottish Government before the deal was put together? There was simply a demand for £500 million. I agree with the member about the need for engagement, but in the Glasgow case there was no engagement. Things have improved since then.

Photo of Graham Simpson Graham Simpson Conservative

Things have improved, but there have been issues. I will highlight a few more of them.

Communities should be asked what they want for their area. If there are good ideas, a way should be found to incorporate them. There should be a better system for evaluating projects, and more information should be published afterwards on which projects were included, which were not and why. We should be absolutely certain that spending money on a project in one area will not be to the detriment of another area.

There was concern among committee members that there could be displacement in that, for example, firms could move from an area that is not covered by a deal to one that is. We are also not clear about whom exactly the individual cabinets or boards that run each deal are accountable to. In that respect, we welcome Audit Scotland’s forthcoming work on governance and accountability.

We were concerned that artificial barriers are being created by Government criteria, meaning that some worthy projects might not get through. I have been involved in one such project, which aims to create an off-road outdoor cycle training centre next to the Clyde. I might struggle to argue that it would deliver the strict economic growth that is asked for by the Treasury, but it would regenerate the riverside and get local people, especially youngsters, fit in safety.

One of the criticisms of the Glasgow deal has been that councils have used it to dust down projects that have been on their shelves, sometimes for decades. One such project—the Cathkin relief road—has already been built. It is a mile long and cost around £19 million. I attended the opening a year ago, which Keith Brown called a “landmark day”—and not just because I was there. He and others claimed that it was

“set to improve local access to employment”, but those who know the road and where it goes know that that is not true.

That is one of a number of road projects that have been thrown into the mix because there is money lying around. The £62 million Stewartfield Way in East Kilbride is another such project but, luckily, that upgrade to a dual carriageway has not yet started—there is no justification for it. There is also the plan in North Lanarkshire for a so-called relief road to link Holytown to Eurocentral, the effect of which will just be to increase the amount of traffic going through Holytown.

We asked the Glasgow city deal cabinet to tell us what projects are being dropped and what new projects are being brought forward. We know that changes are afoot, but we are still waiting for an answer. It is good that the councils in the Glasgow deal area accept the need to review their plans, but they should be open and honest. City deals are good but, if the Glasgow deal website does not even provide the minutes of meetings, something has to change.

Our inquiry shone a light on the good and the “could do better”. If our recommendations are accepted, all of Scotland will benefit.

Does James Kelly agree that we need some clarity on the Glasgow airport rail link? Somebody should say whether it will go ahead.

Photo of James Kelly James Kelly Labour

We absolutely need clarity. I have been a consistent supporter of the link. It was a matter of deep regret that the Scottish National Party Government ditched it in 2009. As well as being the wrong decision economically, it resulted in £30 million of public money being poured down the drain.

In the press, there is talk of delays. Mr Simpson is absolutely right: we do not have clarity or transparency on why those delays are being reported. We urgently need a decision; in my view, we need a decision that moves the project forward. There is no doubt that a rail link to Glasgow airport would be of tremendous economic benefit to Glasgow and the west of Scotland.

The report makes some valid points about transparency and other issues. It focuses on process, but I think that there needs to be a wider discussion about economic strategy. I note that the cabinet secretary said that he did not think that it was necessary to review the Government’s economic strategy at this point in time, but we are all concerned about the fact that economic growth has not been and is not forecast to be as strong as we would like it to be. Labour believes that progressive taxation should lie at the heart of any economic policy. By putting money into public services—I am thinking, in particular, of education—we provide sound investment in economic growth.

We also need a strong industrial strategy that highlights proper working practices, that pays people well and that ensures that people do not have to go on exploitative zero-hours contracts. Procurement is a big issue that ties in with city deals. Given that such vast amounts of public money are involved in the awarding of contracts, we should ensure that they are awarded to firms that sign up to the Scottish Government’s business pledge; that should be a priority, at any rate. In addition, more powers should be given to councils on issues such as a tourist tax and a land value tax. [

Interruption

.]

I welcome the report, but it must tie in with a wider economic strategy for the Scottish Government if we are to address the issues of sluggish economic growth and to ensure fairness in all our communities.

The Deputy Presiding Officer:

Thank you very much, Mr Kelly. If members disagree with Mr Kelly, there is time in hand for interventions. Members would have their time made up. There is no point in pulling faces at me—for whatever reason.

That has nothing to do with you, Mr Rumbles. I call Mike Rumbles to open for the Liberal Democrats.

Photo of Keith Brown Keith Brown Scottish National Party

I wonder whether it is possible, just for a second, to come back to city region deals, which are the subject of the debate. In relation to the Aberdeen city region deal, the Scottish Government committed £125 million, as did the UK Government; then the Scottish Government contributed a further £234 million. On the idea that there has been underfunding, only one party can be accused of that.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

The minister wants to talk about underfunding. The worst-funded council in Scotland is Aberdeen City Council and the third worst funded council, by the Scottish Government’s figures, is Aberdeenshire Council. Over the past 10 years, NHS Grampian has, for its targets, been underfunded by £165 million. Let us get the facts right here.

For those reasons, the city region deals are not a welcome extra but absolutely essential for long-term sustainability and rebuilding our local economy in the north-east—they are not an extra and should not be considered as such. I believe that the Scottish Government must take action now to ensure that the city region deals deliver what was promised; in short, the city region deals should not become simple mechanisms for delivering existing projects that are already in the pipeline, as we have heard.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I am afraid that I might not have time to take the intervention, but I would like to if I do. The Presiding Officer is indicating that I do.

Photo of Bob Doris Bob Doris Scottish National Party

I agree with Mike Rumbles that the Scottish Government has to do more, as does the UK Government and local authorities. That is supposed to be the partnership that we are trying to create. I am a bit concerned that the focus of Mr Rumbles’ representations is to make the situation very linear. This is about collegiate and partnership working and giving communities a greater say and influence. Does Mr Rumbles agree with that?

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I absolutely agree with that and I understand what the member is saying. The point that I am making is that we cannot rob Peter to pay Paul.

On projects that are already in the pipeline, I mention in particular the grade-separated junction at Laurencekirk. The minister will know that I have been campaigning on that since 2004. The Labour and Liberal Democrat Government promised that it would take the project forward and make the junction safe, and I am delighted that the Scottish Government, as part of the city region deal, is putting funding there and that we are getting a move on, but it is now 2018. That has been 14 years since people lost their lives at the junction. There has been a long-running campaign to make the junction safe, and that should have happened some time ago. The point that I am making is that the Government cannot just include things that should already have happened.

Investment must deliver for the regions as a whole and not just for city hubs, and it must be clearly defined that city region deals should be implemented in a way that creates inclusive growth that brings benefits and opportunities for everyone.

Nevertheless, I have hope—maybe it is the triumph of hope over experience, but I still have hope—that the Scottish Government will take seriously the feedback that stakeholders have provided and the views that are expressed this afternoon by members throughout the chamber.

Photo of James Kelly James Kelly Labour

I thank the committee members, clerks and witnesses for the work that they have put into the inquiry.

It is important to look at city deals in the context of economic growth. When the recent economic growth figure of 0.2 per cent shows that we are running at half the growth rate of the UK as a whole, it is absolutely crucial that the city deals work for Scotland. The UK and Scottish Governments and councils are to be commended for their approach in which, if it works properly, they work collaboratively for the benefit of not only local communities, but the Scottish economy as a whole. That is absolutely crucial.

Members have spoken of the potential benefits of city deals. In the Glasgow and Clyde valley project that Mr Simpson just talked about, there is £1 billion of investment and the potential to create 29,000 jobs. That public investment can attract £3.3 billion of private investment, which is crucial to supporting infrastructure and achieving some important policy outcomes for the UK and Scottish Governments and local government in that area.

In Aberdeen, we can see the crucial role that local government has played in attracting the £370 million bond that contributes towards £1 billion of investment.

The committee report makes some important points, and members have already highlighted the idea that the methodology around project selection must be looked at closely. The fact, which was brought out in the report, that a lot of the scoring is done in private and that there is a lack of transparency about how decisions on projects are made is not good from a policy point of view, or good for the public.

There should be more openness and transparency, because we are talking about the investment of vast amounts of public money. Moreover, it should not just be an accounting exercise, which involves starting with a ballpark figure and finding a certain number of projects, the spending on which will add up to that figure. Each project should be robustly appraised to ensure that it contributes to the overall economic goals of the deal.

I was interested to note what the report says about the engagement event that was held in Paisley. Some of the local representatives were obviously keen on the Glasgow airport rail link. Recently, delays have been reported on the project, and there is a lack of information about the reasons for those delays.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

Thank you very much, Presiding Officer.

There is much to be thankful for in today’s debate. In particular, I welcome the opportunity for the UK and Scottish Governments to work together, alongside local authorities and industry, to develop a long-term strategic plan for growth in our cities and regions. I also welcome the opportunity for local input into the city region deals and the potential for bespoke investment to be developed that focuses on the distinct needs of our communities.

That detail is most important if we want to maximise the benefits for areas such as Aberdeen and for the north-east as a whole. As members will know, the city deal process was spearheaded by Liberal Democrats in the UK coalition Government. I take this opportunity to congratulate all parties for their positive contributions to developing the plans that we have before us and I thank the Local Government and Communities Committee for bringing the debate to the chamber today. However, that does not mean that there is no room for improvement in the city region deals.

I will raise two areas of concern that I believe must be addressed if we want to make the most of the opportunities that lie before us. At the beginning of this process, the city deal was designed to encourage

“local economic growth and the movement of economic decision-making away from central Government.”

I am sorry to say that, despite what I heard Keith Brown say in his speech earlier, the Scottish Government’s view seems to be a bit different from that. In typical Scottish Government fashion, any mention of empowerment and more robust devolution for decision-making in regions has been quietly sidelined. Both the Fraser of Allander institute and the Scottish Council for Development and Industry raised that issue in their submissions, as have many councillors; even the committee highlighted the need for more clarity regarding the purpose of the deals. I agree with the Fraser of Allander institute that city regions

“need to be empowered—with additional roles, funding and competencies, because they will need and are best-placed to identify their infrastructure investment requirements, especially in transport and housing.”

I urge the Scottish Government at this stage to rethink its approach and use the city region deals as an opportunity for long-term, transparent review and a chance to engage directly with communities and strengthen our local institutions. I will not hold my breath while waiting for that to begin, but I will comment on some specifics.

The north-east, more than any other region in Scotland, has faced challenges in recent years, particularly with the oil downturn. Our key industries are only now finding their feet again. Thousands of families and individuals in the region have been left struggling to make ends meet, with very little support from our Governments in Edinburgh and Westminster. It is only because of the vibrancy and perhaps innate strength of our local economy that we can now see growth in key areas starting to return to the region, which is something to be thankful for.

Nevertheless, our local services have suffered from a decade of harmful and sustained underfunding by the Scottish Government. I have raised that issue at every opportunity, and I make no excuses for raising it again. In many areas—health, education, rail and local services—our communities have been the worst-funded communities in Scotland for many years, and that fact is now hitting home.

The Deputy Presiding Officer:

We move on to the open debate. As I said, we have time in hand for interventions, which I would encourage to liven up matters—not that they need livened up, and anyway I have Mr Gibson next. [

Laughter

.]

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

Thank you, Presiding Officer.

Having pressed for the report “City Regions—Deal or No Deal?” to be debated, I was delighted that my fellow committee members were equally enthusiastic.

The growth in the city region deal initiative between the Scottish and UK Governments and local partners is designed to stimulate economic growth and create jobs through the investment of money in large-scale infrastructure projects and the leveraging in of private investment. I was delighted that the cabinet secretary, in his opening speech, talked about inclusive growth being a “golden thread” running through the Scottish Government’s thinking. However, I still think that more needs to be done to explain how inclusive growth will be delivered for small-town Scotland in particular. For example, we heard at committee about the “inclusive growth diagnostic”. When I hear such a term, I wonder what it means in terms of delivery on the ground.

The current deals focus on Glasgow, Edinburgh, Aberdeen, Inverness and their surrounding heartlands, and they have seen £1.3 billion of investment from the Scottish Government and £1 billion from the UK Government. The Scottish Government has clearly made a great financial commitment to the deals, but rigid demarcation of reserved and devolved deal components limits scope, in certain circumstances, for some deals. In my view—and, I believe, in the committee’s view—whether a project is reserved or devolved should be irrelevant if we are to attract optimum levels of investment and deliver the best possible outcomes.

Some 4.5 million people in Scotland live in areas that are covered by existing or planned deals, with the plans for deals in Stirling and Clackmannanshire and the Tayside cities currently being discussed and taken forward. That is an impressive figure, and I am delighted that 85 per cent of Scotland’s population live in areas that are covered by current and planned deals. However, as the committee report indicates, that leaves certain areas disadvantaged, as things stand. Patrick Wiggins, director of the Ayrshire growth deal, told the committee:

“Ayrshire is a secondary or tertiary market in commercial terms. The more investment that happens in or close to the centre of Glasgow, the more likely it is to suck up demand in the Scottish economy. That will make it even harder for areas such as Ayrshire to achieve their potential”.—[

Official Report

,

Local Government and Communities Committee

, 15 November 2017; c 11.]

Representing an Ayrshire constituency, I am particularly concerned that the Ayrshire growth deal be progressed as soon as possible, because the longer it takes to get it off the ground, the more disadvantaged Ayrshire will be in having to catch up.

As the committee’s report makes clear, the lack of progress and commitment from the UK Government regarding the Ayrshire growth deal is delaying its implementation. When Lord Duncan came to the committee on 22 November last year with the cabinet secretary, we had plenty of nudges and winks that the Chancellor of the Exchequer, who was presenting the UK budget that very day, would announce the Ayrshire growth deal. That did not happen, nor has it happened in the more than four months since then. That is bizarre, given that parts of the borderlands, including the Secretary of State for Scotland’s constituency, now look set to gain from two deals.

As the committee’s report shows, displacement is a real concern and should be included in any formal assessment of other deals, with the results being made public. Glasgow’s deal began in July 2014, with no date for Ayrshire in sight. The latter cannot but suffer displacement effects in terms of jobs and investment. In fact, I wrote to Scottish ministers and Scottish Enterprise last November regarding a specific displacement of a company from Ayrshire to Glasgow that I was concerned about.

Although the Scottish Government’s firm commitment to securing growth deals for all of Scotland is crucial, it is clear from the committee’s findings that it is vital that the UK Government makes the same commitment. Crucial and necessary dialogue between the two Governments must continue, but an end point is essential. I will therefore be delighted if the cabinet secretary is able to secure a timetable when he meets the Secretary for State for Scotland later this week.

I have raised this issue on numerous occasions, as members will be aware, and the North Ayrshire and Arran MP, Patricia Gibson, led a debate on the same issue in the House of Commons. The Cabinet Secretary for Economy, Jobs and Fair Work has pushed the UK Government to commit to the Ayrshire growth deal, and I am pleased that the Scottish Government has publicly and clearly stated its intentions on multiple occasions. The Ayrshire growth deal is also backed by all three Ayrshire councils.

It is important to note that, despite delays from the UK Government, the Scottish Government’s commitment to fostering growth across Scotland can be seen not only in the city region deals but in wider policies and investment. Steps to stimulate economic growth across the country outside city region deal areas can be seen in Ayrshire, for example, with £5.3 million of investment going towards turning the former Diageo site in Kilmarnock into a low-carbon development that includes hundreds of affordable homes—the Halo project—and the £31.2 million Dalry bypass in my constituency.

Such commitment and investment are vital to Ayrshire, where per capita income is a shocking 32 per cent below the Scottish average. Ayrshire has an economic growth rate that is among the lowest in the UK and an unemployment rate that is among the highest. Ensuring inclusive growth as part of a deal would reduce inequalities across communities in Ayrshire. With its aerospace, life sciences and manufacturing businesses and impending coastal regeneration, the area has a wealth of economic potential that, with the right investment, can provide that part of Scotland with the prosperity that it needs. The projects that are being considered for the deal include £22 million for coastal regeneration in Ardrossan, £30 million for the further development of the life sciences industries, £130 million to develop Ayrshire’s manufacturing sites, £80 million to develop the aerospace industry, and £15 million to develop marine tourism.

It is clear that there is great potential for city deals to positively impact on Scotland and its growth. The committee’s report highlights how much there is to welcome in relation to city deals, not the least of which is the much-needed investment in the Scottish economy.

Although the deals are not without significant issues that need to be addressed, they will bring a long-term strategic approach to improving regional economies, with each deal tailored to its city or growth region, reflecting on its individual strengths and weaknesses and creating a programme to support transformative and positive change.

I welcome that work and the vital advancement that the deals have already brought to large areas of the country, and I look forward to the inclusion of areas—such as Ayrshire—that are not yet included but to which the Scottish Government has already made a clear commitment. I urge the UK Government to follow suit.

The Deputy Presiding Officer:

I call Gordon Lindhurst, who will be followed by Jenny Gilruth. I can give members a generous six minutes, as no one seems to want to intervene.

Photo of Gordon Lindhurst Gordon Lindhurst Conservative

I am pleased to have the opportunity to speak in this debate following the Local Government and Communities Committee’s scrutiny of city deals.

As my colleague Graham Simpson mentioned, an inquiry that was brought about because of concerns about the first city region deal in Glasgow has provided valuable lessons for future deals, including the Edinburgh and south-east Scotland deal. In spite of what could be called teething problems with the Glasgow deal, we should recognise that the deals show what can be done for growth—perhaps even inclusive growth, although, of course, we have no clear definition of that—when our two Governments work together. That growth is badly needed, given that Scotland lags behind the UK as a whole in some areas.

A total of almost £3.4 billion of combined investment has been committed thus far. If concluded deals and those that are being negotiated are combined, they will amount to investment for approximately 83 per cent of people in Scotland. Indeed, both Governments agree that everyone in Scotland should eventually be covered by a deal. Lord Duncan of Springbank stated in evidence that the aim is to colour in “the mosaic of Scotland”. That is a welcome ambition.

Photo of Bob Doris Bob Doris Scottish National Party

I am delighted to hear the member express support for every area of Scotland being covered by a deal. So far, every other speaker has been keen to have a set timescale for achieving that. Would the start of Parliament’s summer recess in July be an appropriate date for the Scottish and UK Governments and local authorities to get together to secure a set timetable to deliver that?

Photo of Gordon Lindhurst Gordon Lindhurst Conservative

Achieving a timetable is certainly a laudable aim. The cabinet secretary may be able to help the member on the timetable that is likely to be achieved by the two Governments working together.

As a Lothian MSP, I was particularly pleased when the heads of terms agreement was signed last year for the Edinburgh and south-east Scotland city region deal. As both Governments and stakeholders noted, the region is of fundamental importance to the Scottish and wider UK economies. With more than a quarter of Scotland’s population and a £33 billion contribution to the Scottish and UK economies, it is a powerhouse.

The deal will see the region receive £1.1 billion of investment. It is estimated that that will generate about five times that amount in gross value added over its 15-year life. The deal is an example of the union dividend paying off for our constituents as the UK and Scottish Governments work constructively together.

Photo of Gordon Lindhurst Gordon Lindhurst Conservative

I am sorry, but not today; perhaps later.

There is much to be excited about as we look ahead to the projects that are being planned as part of the deal, because they will deliver not just growth, but growth that can benefit the whole region, across society. The ambition of securing Edinburgh’s position as the data capital of Europe, for example, could be of Scotland-wide benefit. There is to be investment of £350 million for a research, development and innovation programme, including a data-driven innovation programme in a partnership between the University of Edinburgh and Heriot-Watt University.

As the First Minister has acknowledged, we have a digital skills deficit that is holding back growth—the Economy, Jobs and Fair Work Committee has heard about that issue over the past few weeks. By investing further and firmly establishing Edinburgh as the best place in the UK for computer science and informatics research, more jobs could be created—possibly as many as 20,000.

The £140 million investment in grade separation at the Sheriffhall roundabout on the A720 will be a relief for motorists. The upgrade is badly needed on a trunk road that at times has some of the worst congestion problems in the UK. However, the top-down approach identified in the Local Government and Communities Committee’s report can be problematic for stakeholders, even in that example. Cyclists are concerned about the Scottish Government’s preferred option of a flyover. How will their safety be taken account of and incorporated in the upgrade? They have voiced their frustrations throughout the on-going process and their experience reflects some of the conclusions in the committee’s report, including the recommendation that weighting be given to engagement when scoring the success of projects in a deal. As my colleague Graham Simpson highlighted, that could help to ensure that engagement has been meaningful rather than just informative after decisions have been taken.

I am pleased that the Edinburgh and south-east Scotland deal is meeting the twin aims of economic growth and inclusive growth. The committee identified the need for better co-operation from both Governments. Edinburgh has perhaps benefited from having had more time to learn about inclusive growth and how to incorporate it, despite policy Scotland noting that that remains an elusive term—although I accept that it may be a repeated “golden thread”, as referred to by Kenny Gibson.

The Deputy Presiding Officer:

Will you clarify a matter for me, Mr Lindhurst? Did you say that you would not take an intervention from Mr Arthur “today”? That made me wonder how long the debate will last.

I call Jenny Gilruth.

Photo of Jenny Gilruth Jenny Gilruth Scottish National Party

I thank the clerks on the Local Government and Communities Committee for their resolute professionalism and their hard work in pulling together the report on city deals. I note how evident it is today which members have read the report before contributing to the debate. As fellow committee members will know, I have something of a history with city deals, so it will not surprise them that I will focus on the Edinburgh and south-east Scotland city regional deal, of which my Mid Fife and Glenrothes constituency is a partner.

In July 2017, I first critiqued the Edinburgh city region deal as a missed opportunity for Fife and specifically for the Levenmouth rail link. Levenmouth is the largest urban area in Scotland that is not directly connected by rail. One in three children lives in poverty. The new Levenmouth academy, which was funded by over £25 million of Scottish Government money, was the second-highest recipient of the attainment fund in the country last year; the calculation for that is predicated on entitlement to free school meals.

My constituency needs the Levenmouth rail link to allow inclusive growth to flourish. Without it, we are cut adrift. Shiny new roundabouts and concert halls for the city must sound good to Edinburgh’s residents. What will they mean for children growing up in Fife?

The report addresses a lack of transparency over the Edinburgh city deal; it describes the process as opaque and points to a lack of consultation with local communities and businesses about what they wanted.

Photo of James Kelly James Kelly Labour

Jenny Gilruth makes some reasonable points about the Levenmouth rail link. What is the view of the Minister for Transport and the Islands on that? Is he supportive of it?

Photo of Jenny Gilruth Jenny Gilruth Scottish National Party

I cannot speak for the transport minister. I will tell members about the view of the Labour leader of Fife Council. His view was that

“consultation with communities can be overegged.”—[

Official Report, Local Government and Communities Committee,

8 November 2017; c 13.]

We are talking about £1 billion of public money. It might be considered that the person who is tasked with running Fife Council would have asked local communities about how that cash would be spent.

Photo of Jenny Gilruth Jenny Gilruth Scottish National Party

No, thank you.

Fife Council could not provide substantive evidence to show how it had engaged with communities at all.

The committee received evidence from environmental groups such as Scottish Environment LINK. It told us:

“there is more of a focus on specific capital projects than on using these investments to establish a direction of travel towards low carbon, inclusive and prosperous city-regions.”

As a former member of the Environment, Climate Change and Land Reform Committee, I know only too well about the need to facilitate a modal shift from road to rail to enable the Government to meet its emissions targets. New rail lines are therefore essential, because we cannot facilitate modal shift if there are no trains to shift to. Indeed, the importance of transport links as a driver for inclusive growth is flagged up in the Local Government and Communities Committee’s report, which links transport funding through, for example, a station fund to Government policies on economic growth and skills development.

As the Joseph Rowntree Foundation noted in its written submission to the committee:

“‘Inclusive growth’ has potential to gain support across the political spectrum: a more inclusive economy will reduce poverty and inequality”.

That is vital to areas such as Levenmouth in my constituency, as I have previously illustrated.

Perhaps the most important issue for my constituents is exactly how local authorities prioritise projects. The campaign group Transform Scotland commented that the selection of projects was

“shrouded in a degree of secrecy on the basis of being sensitive, or confidential, at least until they are agreed” and that

“even after agreement, some of the transport projects are vague and non-specific”.

The Federation of Small Businesses said:

“there are big concerns about the lack of transparency at the development and implementation stages and the lack of more inclusive and discursive engagement with the private sector.”—[

Official Report

,

Local Government and Communities Committee

, 1 November 2017; c 34.]

Let us return to the kingdom of Fife. David Ross told the committee that Scottish Government officials had blocked the inclusion of the Levenmouth rail link. He stated:

“the clear understanding that we got from Government officials was that the project”— the Levenmouth rail link—

“would not meet the specific criteria they were looking for in the city deal.”—[

Official Report

,

Local Government and Communities Committee

, 8 November 2017; c 32]

That is a strong accusation to levy at any Government, so on 21 November my office submitted a freedom of information request to Fife Council for copies of all correspondence between the council and the Scottish Government relating to the Edinburgh city region deal.

The FOI request was ignored. That was then treated as a refusal by the Scottish Information Commissioner, and the FOI was resubmitted on 12 January. Fife Council finally responded some 79 days after the initial request. None of the documentation that was provided answered how the council prioritised projects. Rather, I was provided with a clutch of redacted emails that were as clear as mud. Indeed, Fife Council’s legal team decided to withhold the information requested.

Perhaps the Cabinet Secretary for Economy, Jobs and Fair Work, Keith Brown, summed it up best when he advised the committee:

“I was with Councillor Ross at the signing of the deal and I have no recollection of any objection being raised to the deal that was proposed ... As far as the process is concerned, the Levenmouth rail link was not part of the final proposal from Fife Council.”—[

Official Report

,

Local Government and Communities Committee

, 22 November 2017; c 13, 14.]

There you have it. The Levenmouth rail link is meant to be the number 1 transport priority for Fife Council. Even when it was provided with an open goal, it still missed the shot.

We might well ask why Fife Council is so keen to hide information regarding the projects that it asked for in the city deal. Is it because it did not ask for the Levenmouth rail link? Is it because there was a prioritisation process that did not include the number 1 transport priority for the region? Or is it because there is no evidence of Scottish Government officials blocking the rail link’s inclusion in the deal? The answer to those questions now lies with the Scottish Information Commissioner.

I think that the Leven rail link will be reinstated one day and that it will transform the lives of the people in Levenmouth. It will be the anchor that drives inclusive growth in a pocket of Fife that has, for generations, been blighted by the nightmares of its economic past.

The Edinburgh city region deal was a deal for the city. Fife Council did not ask for the Leven rail link, it did not consult communities and it tried to pass the buck when the game was up. Let me use the words of the committee’s report: no deal.

Photo of David Stewart David Stewart Labour

I thank the Local Government and Communities Committee for its hard work in taking evidence and producing an excellent report on city region deals.

The objective of the English city deal proposals was to stimulate growth and create jobs through investment, mainly but not exclusively in large-scale infrastructure projects. The approach is echoed in Scotland and follows the economic model of growth points as engines of change and productivity.

Across the globe, there are many examples of such an approach. In the States, the Hoover dam was built after the great depression, in 1931, at a cost of $860 million in today’s prices. The dam holds 9 trillion gallons of water in Lake Mead. Its construction created thousands of jobs and the dam still has a role in stimulating tourism.

As we heard, city region deals are about partnership with local authorities—I agree with that—and the front runners are Glasgow, Aberdeen, Inverness and Highland and Edinburgh. As Kenneth Gibson said, a number of other councils are preparing city deals in the wings.

I am particularly interested in the Inverness and Highland city region deal, but before I talk about that I want to consider more closely some of the general themes in the committee’s report, which was a good read and contained interesting points. First, what is the objective of city region deals? I will be slightly pedantic and point out that the Scottish Government’s goal of inclusive growth is slightly different from, but should not come into conflict with, that of the UK, which is purely about economic growth—I say for the technocrats among members that that is a measure of gross value added.

The focus should always be on achieving the best deal for the city region. As the Joseph Rowntree Foundation said in its submission to the committee,

“city regions should make inclusive growth the main organising principle for their place, leading the agenda and catalysing action. This should include setting ambitious new targets around employment, pay, progression and skills attainment.”

It is about not just jobs but progression to more skilled and higher-level posts.

Many members talked about how projects are selected. Are they additional or do they displace jobs in other regions? I will say more about that later. What will the long-term impact be in parts of Scotland that are not covered by city region deals? In my region, such areas include the Western Isles, Orkney and Shetland and Argyll and Bute.

What will be the effect of Brexit and the potential loss of European Union funding? In my patch, EU funding amounts to €1 billion—yes, billion—for the Highlands and Islands alone, through the European regional development fund, European social funds, agriculture and fisheries funding, Interreg and other EU programmes.

Are city deals effective at attracting genuine new investment? Like other members, I welcome Audit Scotland’s decision to review the performance of city deals. The centre for urban and regional development studies at Newcastle University said in its submission:

“This work is bedevilled by issues about additionality, attribution, displacement and the long-term nature of many of the City Deal investments and their potential outputs, outcomes and impacts. The nature of the deal-making and negotiating processes lends itself to the over-claiming on potential benefits by local actors as part of attempting to leverage higher levels of central government support and a more advantageous deal. Robust assessment of the difference that City Deals make or not is fundamental.”

In that context, I agree with the Local Government and Communities Committee’s conclusions. We need a sustainability audit and equality impact assessments. A clear and transparent risk assessment for each deal would also be extremely helpful. There was some debate about this in the evidence that the committee received, but I think that it would probably be useful if city deals had more involvement with business and the third sector.

The Inverness and Highland city region deal includes an agreement to start by funding three projects: a science skills academy; the University of the Highlands and Islands school of health, social care and life sciences; and a major land reclamation project at the Longman industrial estate in Inverness, to stimulate new business.

Over the past decade or so, my region has benefited from the creation of the UHI, along with major investments in digital infrastructure and transport. However, it faces significant challenges, and depopulation caused by the outmigration of young people, often due to the lack of higher education and employment opportunities, is a major issue.

I agree with the deal’s aims, which are

“to create new well-paid jobs in the private sector ... encourage young people to remain ... boost the region’s growing sectors such as tourism and life sciences” and to build more affordable homes.

Promoting innovation, internationalisation and new partnerships among the region’s many small businesses is key. Improving connectivity with transport investment is vital, along with becoming the best digitally connected rural region in Europe.

In the few seconds that I have left, I want to highlight other projects, including the city region wi-fi project, which is excellent for good practice, and the northern innovation hub that is to be delivered by Highlands and Islands Enterprise and the local council. I flag up the fit house project, which members might not have come across; the project enables innovative assisted living schemes, using the latest healthcare information technology, to allow elderly people to live in their communities and avoid the need for them to be taken into hospitals or care homes.

My region has many strengths in life sciences, tourism, food and drink, and the creative industries. I believe that the Inverness and Highland city region deal will bring much development, many jobs and an economic boost to one of the most rural and peripheral parts of Scotland, whose gross domestic product lags behind those of many similar regions across the European Union. In the words of Michelle Obama:

“Cities are a complex, big, messy enterprise. And they’re expensive ... If we’re going to have cities, then we have to invest.”

Photo of Linda Fabiani Linda Fabiani Scottish National Party

We have quite a bit of time in hand, so if any member desperately wishes to intervene on colleagues, I can give them extra time.

Photo of Willie Coffey Willie Coffey Scottish National Party

When I read the committee’s extensive report on the city region deals, including its many recommendations, I could not help but feel that the original strategy to develop and progress such initiatives could have benefited from some careful thinking and planning at the outset.

The deals more or less emerged from a UK Government white paper in 2011. They were known then as city deals—the idea being that cities would drive economic growth, and that every town and village would begin to glow in the slipstream of economic recovery that the deals would create. Not so in Scotland, of course: we have many more towns and villages than we have cities, and most are nowhere near enough to the cities to allow them to experience that economic afterglow. The idea that all that we need to do is invest millions upon millions in places like London, or even Glasgow and Edinburgh, and the rest of our country will inevitably reap the benefit is not realistic, in my view, and has been criticised by some people who gave evidence to the committee as being a little simplistic and dated.

In Ayrshire, our very own Patrick Wiggins, who heads up our growth deal efforts, warned the committee about that, as was mentioned earlier by Kenny Gibson. What he said is, nonetheless, worth repeating. He said:

“The more investment that happens in or close to the centre of Glasgow, the more likely it is to suck up demand in the Scottish economy. That will make it even harder for areas such as Ayrshire to achieve their potential” —[

Official Report

,

Local Government and Communities Committee

,15 November 2017; c 11.]

That should be a warning about the strategy and approach that the deals could take.

Indeed, in the report, Professor Duncan Maclennan of Policy Scotland went on to say that Scotland is “a country of towns” and that

“the national spatial planning framework ... has had a coach and horses ridden through it by the city deals”.—[

Official Report, Local Government and Communities Committee

, 1 November 2017; c 43.]

The committee, under Bob Doris’s convenership, should be commended for this important piece of work and its focus on a number of issues that should probably have been considered at a far earlier stage: for example, whether the strategy’s focus is on economic or inclusive growth, or both; how the deals are assessed and selected, and in what order; how they are to be managed and made subject to appropriate scrutiny; the capacity to deliver them; and, of course, how their outcomes will be delivered and the impact that they must make if they are to be judged a success.

We should have seen all that work being done much earlier in the programme, but there is still time to get it right. Audit Scotland will no doubt have something to say along those lines when it completes its work of examining the progress that has been made by the deals. On the positive side, there is much to commend in what has been put in place so far, and in what will likely follow.

The cabinet secretary recognised that the deals have matured a bit and are no longer simple lists of infrastructure projects; they are beginning to integrate much more with the private sector. However, they need to focus on transformational and inclusive growth, as has been recognised by the committee in some of its conclusions.

Glasgow, Aberdeen, Inverness and Edinburgh, and their surrounding regions, all have their plans under way, with their priorities having been set and with significant funding of about £1.3 billion from the Scottish Government to support the various programmes. The plans all seem to include a mixture of transport and infrastructure developments, but all also have unique priorities, as they should.

The trick for me and for many others whose constituencies do not yet feature will be in how those deals effectively reach out and bring that benefit to the wider communities and towns across Scotland. To succeed, as many of the people who gave evidence said, cities must not simply act as magnets, pulling in the skilled pool of people from neighbouring towns and clogging up our motorways as people commute to the cities to access the growing jobs markets there.

That brings me to Ayrshire and the proposed growth deal there. The committee commented that deals need to be more closely integrated with private sector initiatives. We can see that integration clearly in the proposals for Ayrshire, which support the aerospace and life sciences industries, as well as marine tourism. In particular, the Halo project in Kilmarnock is a £65 million project to create a dynamic commerce, education, culture and leisure quarter, including good-quality housing, on the site of the former Johnnie Walker plant, which sadly—and wrongly, in my opinion—closed its doors in 2012. The potential is incredible; all we are waiting for is full buy-in from the UK Government to back Ayrshire in the same way as it has done in the deals elsewhere in Scotland. The committee called for a clearer timetable for all that to happen. I am hopeful that that can be agreed soon. Ayrshire expects no less.

The city region growth deals are a fantastic opportunity to deliver real inclusive growth right across Scotland. They could have been planned and timetabled much better, but the potential exists for them to make a huge and positive difference to all communities in Scotland, including Ayrshire. I am happy to endorse and support the fine work that has been done by our committee colleagues in producing the report.

The Deputy Presiding Officer:

I call Brian Whittle, to be followed by Claire Baker. I am happy to give a little extra time, if that would be useful.

Photo of Brian Whittle Brian Whittle Conservative

I am grateful for the opportunity to speak in today’s debate. I also want to thank the Local Government and Communities Committee for its work in developing its report and for bringing the debate to the chamber.

As most members in the chamber are aware, I have been working hard to try to persuade both the Scottish and the UK Governments to invest in the Ayrshire growth deal specifically. Ayrshire has suffered more than most areas from underinvestment from central Governments, both in terms of job creation and in terms of transport infrastructure. Those things are intrinsically linked. The campaigns around the chronic need for dualling the A77 and A75 main arteries, which connect the busy port of Cairnryan with the central belt and the south, are well known. However, the A70, the A71 and the A76 are also operating well beyond the volume of traffic for which they were designed.

The Bellfield interchange at Kilmarnock is hugely important to the development of major proposals within the growth deal for both East and North Ayrshire. Not only is the Bellfield interchange no longer able to cope with the current volume of traffic, it is dangerous, with traffic queuing off the slip roads and on to the main A77 carriageway during peak times—so much so that Transport Scotland has objected a couple of times to further commercial developments in the area, so the situation is stifling some development.

It is very important that we link the Ayrshire growth deal with the campaign to invest in transport infrastructure in the south-west of Scotland. As an aside, I say that I was particularly disappointed that the Minister for Transport and the Islands, Humza Yousaf, was conspicuous by his absence at the recent Ayrshire transport summit.

Ayrshire’s unemployment level is higher than the Scottish average, and it has a lower employment rate. It has more people living in deprivation than the Scottish average, and has a declining population against a national increase, and there is a productivity gap in the area, with the gross value added figure having increased at a lower rate than the Scottish average. Investment in innovation is lower than the Scottish average, and research and development spending per head is less than one fifth of the Scottish average, and the gap is widening. Furthermore, Ayrshire's employment structure relies very heavily on the public sector, with there being relatively few large businesses in the area.

However, Ayrshire has much scope for development. The UK and Scottish Governments admit that the Ayrshire growth deal proposals are much more advanced than just about any other growth deal that is under way. The proposals are hugely ambitious and are capable of transforming Ayrshire’s economy, which would have a significant knock-on effect on the Scottish economy.

The proposals include development of the aerospace industries in South Ayrshire, development of the Ardeer peninsula and Irvine harbour side, funding of the coastal regeneration of Ardrossan and the exciting development in manufacturing at Moorfield, Bellfield and the former Johnnie Walker site on Hill Street. We have an application in for a spaceport at Prestwick, for goodness’ sake! So, in fact, the sky is not the limit of our ambition.

What is unique about the Ayrshire growth deal is that there has been collaboration between three councils—South Ayrshire, East Ayrshire and North Ayrshire. It is to their credit that they have managed to maintain that triumvirate of councils throughout the process, while watching other deals seemingly jump the queue.

With regard to the UK Government, I have been speaking regularly with the Scottish Office, as well as encouraging Ruth Davidson and Murdo Fraser to push the case for the Ayrshire growth deal every time they are at Westminster, which they have been doing. I invited Greg Clark MP to meet the Ayrshire growth deal team and the Halo project team which—as has been mentioned—resulted in a welcome investment in that project in Kilmarnock from the UK and Scottish Governments.

However, that investment took too long and we nearly lost that initiative, with the green light being given late, at the eleventh hour. Now, that project is well under way, and it is very exciting to see it developing before everybody’s eyes. Every time I pass it, I have to smile. As Willie Coffey mentioned, the project will release an overall investment of well over £60 million—in fact, it will be £65 million—in Kilmarnock and East Ayrshire as a whole.

We should not let the Ayrshire growth deal drag on in the same way. When I speak to the UK Government, I find that the signs are all positive—it is more a case of “when”, than of “if”. The Scottish Government’s position is not much different, although it seems to be a holding position.

Photo of Keith Brown Keith Brown Scottish National Party

I will clarify the Scottish Government’s position, although it is perfectly clear.

I am very keen to get on with the Ayrshire growth deal, and I have said so a number of times to the Secretary of State for Scotland. We were meant to meet two weeks ago but, for various reasons, that meeting did not happen. If the UK Government is not able to signal its support when next we meet, the Scottish Government is left with two options: we can either not proceed or we can proceed—at which point a UK Government contribution would be locked out.

We can make more of the deal if the two Governments work together. There is nothing stopping the Scottish Government moving forward, other than our having to wait for an answer from the UK Government. We are happy to go.

I agree with all the other points that Brian Whittle has made about how the Ayrshire councils have collaborated. We just need to get the green light to go ahead.

Photo of Brian Whittle Brian Whittle Conservative

I thank Keith Brown for his clarification on the Scottish Government’s position. I will not make a political point because, quite frankly, I do not care who makes the first move. I can talk only about the feedback that I have had from the UK Government and the conversations that we have had about the issue. All that I need is for somebody to move.

I would like the Scottish Government to quantify what its support means, and what projects it is willing to support. Neither party is taking the decisive first step that would make all the considerable efforts of the Ayrshire councils worth their while and benefit the region as a whole. Sometimes, I am left with the sense that the attitude that is adopted by both Governments is not one of collaboration but of competition. The initiative is supposed to be about getting regions to work together, but the two largest players in the projects seem to be prone to adopting an approach of, “We’ll do our thing, you do yours, and let’s see how it goes.” Perhaps for the Ayrshire growth deal, it is more a case of, “You show me yours.”

Keith Brown has said:

“City Region Deals represent an important opportunity for inclusive economic growth and to forge new collaborations between the Scottish Government, the UK Government and local authorities and their regional partners.”

I could not agree more with him—so there goes my credibility—and, probably, his as well.

One party has to make a move here or—which would be preferable, as Keith Brown said—both parties should move together. While we have this kind of stand-off and, quite frankly, political manoeuvring, the people who suffer are the people of Ayrshire, as do the economy of the region and the economy of Scotland as a whole. I call on both parties to agree to the Ayrshire growth deal and to get it moving. There is genuine will on both sides, and it is the right thing to do.

The Scottish Conservatives support both Governments in delivering growth deals that cover every part of Scotland to the benefit of the whole country. Let us get on with it. As I said to Keith Brown, I really do not care how that comes about or who moves first—regardless of who makes the Ayrshire growth deal happen, I will be happy to stand up in the chamber and congratulate them.

Photo of Claire Baker Claire Baker Labour

I am pleased to speak in the debate. In Mid Scotland and Fife, city region deals are increasingly becoming a feature of our local economy and planning. The Stirling and Clackmannanshire city region deal sits completely within my region, while the Edinburgh and south-east Scotland city region deal and the Tay cities region deal benefit from encapsulating Fife, although that presents challenges about where the bulk of the investment lies.

For better or worse, the ink has dried on the agreement on the Edinburgh and south-east Scotland city region deal, although I understand that the Stirling deal is imminent and the Tay deal is still in discussion. On balance, I support city region deals, although I agree that the extent to which Fife will benefit from the Edinburgh deal, which seems weighted towards the city, is not yet clear.

I welcome the work of the Local Government and Communities Committee in undertaking the inquiry. As Bob Doris said, this is the first time that we have had a debate of substance on the issue in Parliament.

City region deals were introduced by the UK Government as city deals. In Scotland, due to the scale and benefit, they are more commonly known as city region deals, and they are a shared initiative from the Scottish and UK Governments with the aim of stimulating economic growth and creating jobs focused around an economic hub. City region deals are designed to provide fairly significant funding levels to, in the main, large-scale infrastructure projects that may otherwise be difficult to fund at a local level. At the moment, though, it is not clear what funds will be allocated to which projects.

City region deals also seek to introduce a more strategic approach across a geographical area. Initially, they were perhaps seen as something unique and targeted. Although the Glasgow city region deal led the way, some 83 per cent of the population will now fall under one of the deals.

The committee established a number of areas that it wished to consider. Those areas—effectiveness, decision making and localism—were set out by the convener in his opening comments, and the committee’s consideration is welcome. The committee acknowledges that we are in the early days of the city region deals and that it will take time before a real evaluation can be made. At this stage, the sums of money all sound impressive, but none of it has yet been spent. It is important that we monitor progress going forward, that delivery is real and that benefits are realised.

The committee was sceptical about the employment figures that were being promoted. I hope that that scepticism is not justified and that efforts are focused on job creation. The big, shiny announcement is the easy part. James Kelly made important points about the need for quality jobs that are well paid and sustainable.

The committee made an excellent point about the importance of the key partners—the UK Government, the Scottish Government and local government—working closely together to maximise the effectiveness of the investment and to avoid overlap or confusion. In evidence to the committee, the UK Government, represented by Lord Duncan, and the Scottish Government, represented by Keith Brown, acknowledged where the weaknesses in that arrangement lie. That might indicate the ability of the two Governments to reach a solution, although that will involve the challenge of dialogue with the Treasury.

Good points were made by the committee about monitoring, evaluation and governance. The projects that have been proposed are significant and require oversight. Audit Scotland’s work and its report will be important in that regard and will provide the Parliament with further opportunity for scrutiny, which is to be welcomed.

I also welcome the contribution of Johanna Boyd, who was the leader of Stirling Council when the Stirling and Clackmannanshire city region deal was agreed. During the campaign for Stirling to be awarded a city region deal, Johanna Boyd kindly briefed me on the proposals. It is clear that Johanna’s commitment, energy and vision for the deal were key factors in success for the Stirling area. There has been and continues to be a political consensus and agreement on the potential for Stirling, which is a good foundation for going forward.

As a Mid-Scotland and Fife MSP, I am well aware of the disappointment at the fact that the Levenmouth rail project does not feature in the Edinburgh city deal, and it is right that questions are asked. As the committee recognised, although the UK and Scottish Governments do not propose projects, they have clear criteria for what they are looking for from projects and what they want their focus to be, and they have a method of scoring, all of which is dealt with in private and not put in the public domain. I understand that part of the criteria for any transport project is that it is significant, is consistent with the Scottish Government’s Transport Scotland priorities for investment and is Scottish transport appraisal guidance ready. The committee identified the issues related to discussions taking place in private, and that lack of transparency has led to disputes.

The Levenmouth rail project has a significant amount of support in Fife and across the chamber. I recognise Jenny Gilruth’s commitment to the project, as I recognise that of other MSPs across the chamber. Ms Gilruth led a very positive debate in the Parliament last year, and there have been strong advantages in sending out a united political message from Fife.

Therefore, I find the attacks on Fife Council for what is or is not in the deal rather odd. The attempt to question Fife Council’s commitment to the project is, I believe, unfair, as, during the time that I have been an MSP, regardless of the political hue of the council, it has always supported the campaign in the ways that it can.

Photo of Claire Baker Claire Baker Labour

No. Ms Gilruth did not take an intervention from me on the issue although I asked her to three times.

If it comes to it, in this instance, I am inclined to support the statements of Fife councillors in the debate about what happened in negotiations, as they are more focused on the concerns of Fife than either the Scottish Government or the UK Government.

The most significant issue around city region deals might be the challenges for the smaller partners in securing their share of the significant investment in the deals, which are often dominated by a big city. I recognise that there is an appetite across Scotland for investment in public transport infrastructure. There is also frustration at the level of scrutiny that plans have to go through, with the associated costs and without any real commitment to delivery from the Scottish Government.

Nevertheless, I believe that the dispute about the Levenmouth rail link’s place in the city deal is a red herring. I strongly suggest that what is more problematic for the Levenmouth rail campaign at the moment is Transport Scotland’s delaying tactics and the transport minister’s lack of clarity about his intentions for the project. Those issues need to be resolved outside today’s discussion of the city deals.

In closing, although the partnership approach is welcome and can realise rewards, other members have made good points about the need to empower local authorities and communities to be equal partners in the deals going forward.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I put on record my appreciation of the work that was carried out by the Local Government and Communities Committee, ably convened by Bob Doris, on the city region deals. I very much welcome the debate, although so far it has been tinged with a bit more pessimism than I had anticipated.

As might be imagined, I will concentrate on the Stirling and Clackmannanshire deal, although I will come back to wider committee matters towards the end of my speech.

In November 2016, the Scottish Government announced that discussions would begin with Stirling Council on a city region deal that would include Clackmannanshire. That commitment was shortly followed by a similar announcement by the UK chancellor in his autumn budget. That was the beginning of a process that has seen many months of negotiation and discussion to get us where we are today.

It has not always been easy. There have been challenging discussions, but I believe that the general cross-party consensus that we managed to achieve on the Stirling and Clackmannanshire city region deal has been of benefit. Claire Baker identified the cross-party nature of the work in the Stirling area in her speech. As I understand it, we are just weeks—or even days—away from heads of terms on the deal being signed off by the two Governments and the two local authorities.

However, none of that would have been possible had it not been for the gold-standard business case that was put together by Stirling Council officials back at the beginning of the process. I know for a fact that their hard work and well considered proposals impressed civil servants in both the Scottish and United Kingdom Governments, and that gave the Stirling and Clackmannanshire city region deal a head start in negotiations.

The Stirling and Clackmannanshire city region deal is a vision for our area that will see inclusive growth, the development of new industries and the promotion of start-up businesses. By building on our outstanding tourism opportunities and potential, we will further the promotion of the area not only as a place to visit but as one to move to and invest in.

At the heart of the deal proposal is a programme of opportunities to build our local economy and grow and develop local communities. For example, the digital district will put Stirling front and centre for digital enterprise and innovation not only here in Scotland but potentially across the world. The creation of a digital hub and a digital campus will not only create growth but offer opportunities for training, apprenticeships and employment. The hub, located in the old municipal buildings, is a space where students and businesses can work together collaboratively. It has already attracted the internationally renowned start-up company CodeBase. However, that is only the beginning, and the ambition in this area should be limitless.

The campus, which is to be located in the Albert Halls, will be a centre for UK conferences, seminars and programmes on digital innovation and technological progress. That exciting aspect of the city region deal will truly help to define Stirling’s place in digital enterprise and innovation, working in collaboration with the University of Stirling and Forth Valley College.

The city of Stirling’s relationship with the River Forth presents an opportunity to create enhanced pedestrian and cycle paths as well as, perhaps, to establish a new system of water taxis. That is quite an imaginative proposal and will require significant engineering in the area. It will be challenging to achieve because, as members will know, the Forth is tidal in that part of the world. Time will tell whether that particular element will find its way to success.

The initiative to support active travel along the Forth will connect the city centre to other parts of the Stirling area. In addition to that, the harbour developments will see the creation of a shared civic space, an external performance and events space and a bespoke city harbour square. That will sit alongside the Engine Shed, which is Historic Scotland’s world-leading centre for conservation, skills and heritage. The harbour will also include a new national tartan centre, which will be located alongside the magnificent new hub for third sector innovation that is already under construction.

Making use of outdoor opportunities and the development of a new city park is a key part of the city region deal proposals. The creation of an outdoor destination at the foot of Stirling castle will ensure that Stirling’s city park will be one of the most recognisable and distinctive parks in the country. At the top of the town—an area that I accept is sometimes challenged in relation to social issues that have to be overcome—there is a proposal that will see the historic old town turned into a cultural quarter for Stirling. That issue is not talked about enough in relation to city deals, but it can add significantly to the economic growth of an area and, in this case, it can give people access to something beyond the landscape and history of this fantastic part of Scotland.

We must recognise that there has been criticism of large amounts of investment being focused geographically on cities. It is important that people in villages such as Aberfoyle have increased ease of access to the numerous services that would come from the proposals that we are discussing. Already, a new digital hub has been established in Aberfoyle, providing shared space for local people and organisations to use. That is a fantastic template and it needs to be expanded to other areas. Such initiatives might not be part of the city deal—not everything can be done as part of the city deal process—but the city deal can be the generator that creates that extra activity.

Similarly, we must figure out how to invest in transport and travel solutions for people in places such as the eastern villages in order to make the city of Stirling accessible to and inclusive of everybody. That can be done through improved transport links and through, for example, furthering Stirling’s cycling ambition, which is demonstrated by the new fleet of electric bikes that the Scottish Government helped to invest in—indeed, the cabinet secretary took part in the opening of that initiative—and the fact that Stirling is now recognised as being one of the most cycling-friendly cities in the country. By working with organisations such as Sustrans, we can open up the opportunity to create flexible solutions that encourage healthy and environmentally friendly travel.

The committee report recommends that the UK and Scottish Governments work together to devise a singular focus and not deal with artificial boundaries, such as some Treasury rules about expenditure on reserved or devolved areas. We need to remove some of those barriers and worry about not where the money comes from but what happens at the end of the day. It is pleasing to note that relations between the two Governments have evolved and that they are working in better partnership as a result of experiences today and in the past. That is certainly the perspective from the city deal relationship in the Stirling area, which is beginning to mature. I look forward to the details of the heads of terms agreement for the Stirling and Clackmannanshire city region deal.

I commend the committee for its excellent work. I do not agree with all its recommendations, but I have spoken to the convener and may explore those arguments at a later date.

The Deputy Presiding Officer:

We will move to the closing speeches. Everyone who took part in the debate should be in the chamber, but they are not. I call Lewis Macdonald.

Photo of Lewis Macdonald Lewis Macdonald Labour

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?

Photo of Keith Brown Keith Brown Scottish National Party

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?

Photo of Lewis Macdonald Lewis Macdonald Labour

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.

Photo of Dean Lockhart Dean Lockhart Conservative

I, too, thank the Local Government and Communities Committee and its clerks, and congratulate them on producing an excellent report.

As we have heard, the first city region deal—the Glasgow deal—has been on the go for almost four years, another three deals are in the process of actively being delivered and others are in the pipeline. Therefore, this is a good time to carry out a preliminary assessment of the city region deal programme. We cannot assess the long-term success of the programme, given that we do not know how it will pan out in the future. Instead, as Bob Doris said, we want to explore the rationale for the city region deals, as well as the prioritisation process and the value for money that has been achieved to date, including the progress that has been made in job creation and economic growth.

The committee’s report makes a number of important points in those areas. It reminds us of the transformative potential of the city region deals. It does so for good reason, because a total of £3.4 billion is scheduled for investment and more than £1 billion of that will come from the UK Government, over and above the spending that is based on the Barnett formula. The city region deals will cover an area that represents 83 per cent of people in Scotland, and it is the ambition of the UK and Scottish Governments to have deals that cover every part of Scotland. We support that.

As has been made clear, every one of the city deals is different. That reflects the different history of the various deals, and the distinctive approach that has been taken by each city region. Bob Doris and Graham Simpson explained that, for historical reasons, the Glasgow deal is heavily based on infrastructure projects. Gordon Lindhurst highlighted the focus of the Edinburgh and south-east Scotland deal on innovation, digital technology and informatics. In the north-east, there has been significant private sector investment and a focus on the oil and gas sector.

In my region, the Stirling and Clackmannanshire deal is about to be signed. As we have heard, the heads of terms are set to be agreed, and we hope that the detail will be announced shortly. It is too early to assess the potential impact of the deal, but the approach that has been taken has been to combine different strands from the other deals and to promote sustainable growth, infrastructure investment and innovation. An emphasis has been placed on a cross-sectoral approach that is based on the prioritisation of digital investment in the city and the surrounding region.

As Bruce Crawford mentioned, it is fair to say that the Stirling and Clackmannanshire deal is a good example of how all stakeholders can learn from some of the evolving challenges that have been encountered in the previous deals. There are certainly lessons to be learned in the regard. Among the challenges that have been mentioned are the problem of displacement and the coverage of city deals, which Jenny Gilruth highlighted. She made a powerful case for the Levenmouth rail project to be included in the Edinburgh and south-east Scotland deal. The Fife Chamber of Commerce and Enterprise has repeatedly expressed concern about the lack of investment in Fife as a result of the city region deals for surrounding areas, such as the Tayside deal. Work needs to be done to analyse the benefits that come to Fife as a result of the city deals.

A number of members have raised the issue of lack of transparency. Bob Doris expressed concerns about the opaque nature of decision making, and Graham Simpson said that there is a need to engage local communities to a greater extent. He highlighted concern about the fact that people feel that projects are being done to them rather than with them.

Photo of Dean Lockhart Dean Lockhart Conservative

I will, in a second.

A number of members have highlighted the tension that exists between local, regional and national priorities, or guidelines, which can sometimes be conflicting. We all hope to achieve the same thing from the city deals, but there is sometimes a lack of clarity on what the local and regional outcomes are.

Photo of Bob Doris Bob Doris Scottish National Party

The committee’s recommendation on opaqueness and a lack of transparency is not directed specifically at the Scottish Government, the UK Government or individual local authorities, which can sometimes put in bids for projects the cost of which goes way beyond the moneys that are available to be spent. In such cases, prioritisation becomes essential. Does Mr Lockhart agree that transparency is essential for not just one tier but all levels of government?

Photo of Dean Lockhart Dean Lockhart Conservative

I completely agree. Given the amount of investment that we are talking about and the transformational impact that it could have, transparency will be key.

The central question that Bob Doris has highlighted about the selection criteria for projects goes to the heart of the matter.

Among the key recommendations in the report, paragraph 177 calls for

“further clarification ... as to whether the focus should be on ... economic growth or inclusive growth”, and paragraph 183 calls for guidance to provide

“a clear, standardised, pan-Scotland system for evaluation of projects”.

In his response, the cabinet secretary referred to

“the collective aim of selecting those activities that can generate the optimal level of regional inclusive growth.”

I agree with the cabinet secretary that we should avoid arguments about semantics in this debate and in delivering the city deals, but he has acknowledged that, as we have heard repeatedly in the Economy, Jobs and Fair Work Committee, inclusive growth has no agreed definition and can mean different things to different people. That becomes difficult when there are a number of different stakeholders with different responsibilities and different names. We create a difficulty if we give them the overriding objective of achieving inclusive growth when that is not defined or there are different views as to what it means.

To be clear, this is not an argument about different policies; I am seeking an answer to the committee’s call for further clarity in respect of the objectives that are being pursued by different stakeholders. It is an argument not for centralisation but for better alignment between the objectives of both local and regional stakeholders. To deliver the requested clarity, the Scottish Government, together with stakeholders, should look at developing local and regional targets that can be quantified and clear outcomes that would benefit local communities as well as the national economy.

For example, the UK Government’s objective of economic growth includes what we could call hard economic targets as well as community-based outcomes. The hard economic targets are: increasing gross value added or GDP; increasing productivity or innovation; and increasing levels of business research and development, private sector investment or foreign direct investment. Those are all traditional economic targets, but the economic strategy also includes community-based outcomes, including increasing the number of college places for those from deprived areas, the number of apprenticeships and the number of jobs in different communities.

It is therefore possible to combine clear targets for hard economic outcomes with those for community-based outcomes. They are all quantifiable targets and outcomes—they can be measured. I encourage the cabinet secretary to explain in his winding-up speech when or whether the Scottish Government will issue more concrete targets in this area.

Audit Scotland will soon review the city deals, but it reviewed the Government’s economic strategy two years ago and I think that some of the analysis in Audit Scotland’s report is equally applicable to the city deals. The central conclusion of that report was that the

“economic strategy sets out the Scottish Government’s priorities and high-level policy approach” but does not

“set out how the strategy, or underpinning policies, will be implemented.”

The report stated that the Scottish Government had no

“action plan setting out clear targets or timescales.”

The Deputy Presiding Officer:

The member has no time for an intervention.

Photo of Dean Lockhart Dean Lockhart Conservative

I think that we all want the city region deals to have the best chance of success, but for that to happen we need further clarity from the Scottish Government about the overall strategic objectives of those deals.

The Deputy Presiding Officer:

I call Keith Brown. You have around eight minutes, cabinet secretary.

Photo of Keith Brown Keith Brown Scottish National Party

It has been an interesting debate, with a number of points of view. I thank the committee for pressing to have the debate and for its report and recommendations. It is clear from the contributions to the debate how ambitious everyone is for the achievement of faster inclusive growth across Scotland. Of course, I whole-heartedly share that ambition.

I will spend some time in responding to some of the points and speeches in the debate. Graham Simpson was relatively positive about the Aberdeen, Inverness and Edinburgh deals but was less positive about the Glasgow deal. I make the point again that the Glasgow city deal was not one on which there was any previous engagement with the Scottish Government. I think that it is the case that the city deals since then have matured and that all parties have overseen that process so that the deals are no longer just a straightforward list of infrastructure projects. I should also say that that is one reason why we have been willing, along with the UK Government, to allow for the possibility of some revision, as long as certain local authorities are not disadvantaged by that and the quantum is not affected. We have said that we are willing to look sympathetically at that.

Mike Rumbles’s contribution was as sophisticated and subtle as ever, so it was a rant about the Scottish Government and how bad it is. The gist was that the SNP should not only do all the things that the Liberal Democrats did not do when they were in office for eight years, but that it should do them right away. I could not quite make it out, but he seemed to argue at one point against the inclusion of the Laurencekirk junction. It is worth pointing out that, during the Liberal Democrats’ terms in office, not a single inch of tarmac was laid either in Laurencekirk or in relation to the Aberdeen western peripheral route.

Kenny Gibson made a very good point about the borderlands. It does not seem logical or fair to many people that we should be considering a borderlands deal in advance of an Ayrshire growth deal, when the borderlands include a constituent part that has already had a city deal. That is not to say that the Scottish Government will not progress a borderlands deal. All that we are saying is that Ayrshire was on the scene many months before that and had done substantial work. That should be recognised.

Gordon Lindhurst, who was virtually overcome with excitement in making his contribution, asked me to clarify the timetable. To be clear, if the ambition is to have a deal for every part of Scotland, which is my ambition, I have to know first of all whether the UK Government wants that as well. I am making not a political point, but simply a practical one. I can progress attempts to do deals around the country just on the basis of the local partners and the Scottish Government, but that closes off the potential for the UK Government to be involved, and for us to make more of those deals. I await clarity on that, and I have asked repeatedly. To be honest, it is not a stand-off, as Brian Wilson described it. I simply need to know from the UK Government whether it wants to contribute to deals or not.

Photo of Brian Whittle Brian Whittle Conservative

I say to the cabinet secretary that I will answer to anything.

The point that I was making was that there is the will on both sides to make this happen. The ask for the Ayrshire growth deal is £350 million. Is it beyond the Scottish Government to make a commitment towards that £350 million, which may in turn drive the UK Government to match that commitment?

Photo of Keith Brown Keith Brown Scottish National Party

I understand the point that Brian Whittle makes but, just to explain, the way that the deals have been put together up to now is that, when the Governments and the local partners agree, they all agree. It is a bit like Brexit: nothing is agreed until everything is agreed. If we first of all agree by ourselves what the quantum from the Scottish Government will be for a particular deal, there can be no proper city region deal or growth deal in relation to that, because we will have changed the basis for it.

That is why I need to know, at least in principle, whether the UK Government wants to contribute to the deal. If it does, that is fine, and we can move ahead quickly.

I am at the end of the road with this. The UK Government will very shortly have to say that it is committing to an Ayrshire growth deal, or we will go on our own and do that, but that would not be through any absence of ambition on the Scottish Government’s part.

Jenny Gilruth made a point about the Levenmouth rail link and she quoted the leader of Fife Council saying that “consultation ... can be overegged.” We have tried and tried to emphasise to local authorities that they are the ones that should be undertaking the consultation. Lewis Macdonald made the point that local authorities are autonomous and not agents of central Government, and they are obliged to carry out the engagement. The Scottish Government can encourage them to do that, but it is not really for the Scottish Government to tell them how to do it. It is important that they do it.

In response to the point that Claire Baker made, I note that, if the constituent parts of those who are involved in a city region deal—by that, I mean the different local authorities—have different views, they should not come to the two Governments saying that they are ready for a city region deal. We wait until they come to us with a joint process. It is not good enough for them to take that approach, agree a deal with the two Governments and, five minutes afterwards, say, “Actually, we don’t like that. We’re not getting a fair share.” There has to be agreement beforehand between the constituent parts: the local authorities. That is the only basis on which we can do it.

Photo of Claire Baker Claire Baker Labour

To be clear, I am positive about the city region deal and I welcome the involvement that the council and the Scottish and UK Governments have had. However, my understanding is that Fife Council saw the final report and understood what was actually involved only one day before the heads of agreement were signed, so it was a very tight timescale. I think that I have a letter from the cabinet secretary that confirms that it was a tight timescale and one that he would rather had been avoided.

There are questions to be answered on all sides. In this case, though, the negotiations were taking place in private, as people have explained. I have confidence that elected members across Fife, regardless of which political party they come from, would have been in there fighting for Fife.

Photo of Keith Brown Keith Brown Scottish National Party

As I recall, we were ready to do a deal on 3 July but we could not get the UK Government to agree. We wanted to put in more money than the UK Government wanted to put in, and we asked whether it would match that. It was not until 18 July that the UK Government, knowing that the date for announcement was 20 July, gave us the confirmation.

The point that I was making was that the local authorities have to agree among themselves. That is the nature of the deal. As a number of members have mentioned, they have to realise that we then have to prioritise. Things were done in the best of faith.

On Ayrshire, Willie Coffey mentioned that we have to move as quickly as we can on the points that he raised. Kenny Gibson and Brian Whittle made the same points. I tried to respond to Brian Whittle on what our position is.

Bruce Crawford made a point about barriers regarding what is reserved and what is devolved, which a number of other members made and which is in the committee’s report. The Scottish Government has not erected a barrier; there has simply been an edict from the UK Government. That edict was not in place for the Glasgow deal, but the UK Government put it in place for the Aberdeenshire deal. We are not hung up on that, but if the UK Government says that it will fund only one part, we have to fund the other.

I have mentioned the point that Lewis Macdonald made. To be fair, he also made a point about the oil and gas sectoral deal. Unfortunately, there has been virtually no consultation by the UK Government on sector deals. When we have asked to be consulted, it has said that it is essentially a private sector thing or a sector-led thing. We have asked to be much more involved.

David Stewart mentioned European funding of €1 billion. He was absolutely right about the Highlands. There is not a single detail about the shared prosperity fund that will replace that. It makes perfect sense, of course, to consider that in the context of city region deals at this point. We have asked the UK Government for clarity on that.

Dean Lockhart had to concede for the first time since he was elected to the Parliament, I think, that the UK Government is responsible for some parts of the economy in Scotland. That must mean that there has been progress, but his speech deteriorated into an SNP-bad ramble towards the end. He also mentioned economic targets. It is fair enough that he raised that matter, and I will perhaps respond to him in writing, given the time. However, what he said has to be true of the other partners, as well; it cannot be true of just one partner. If the local authorities and the UK Government are involved, there must be a partnership approach.

The Scottish Government is grateful to the committee for its inquiry and its recommendations in the final report. We are committed to driving forward inclusive growth—a definition of which has been provided a number of times in the chamber—across Scotland. We look forward to updating Parliament on the progress that has been made in due course.

Photo of Linda Fabiani Linda Fabiani Scottish National Party

I call Monica Lennon to close on behalf of the Local Government and Communities Committee.

Photo of Monica Lennon Monica Lennon Labour

As the deputy convener of the Local Government and Communities Committee, I thank the Presiding Officer for the opportunity to close the debate.

I have listened with great interest to the views of members during an important and broadly consensual debate. That consensus reflects the fact that there is a lot of support for the principle of city region deals and other initiatives such as growth deals. However, as the committee has highlighted, a number of things need to be worked on and improved.

Much of the work for the inquiry was done before I joined the committee, at the start of the year. Therefore, I pay tribute to my fellow committee members and my predecessor as deputy convener, Elaine Smith MSP, for their work and careful deliberations.

As a member for the Central Scotland region, I echo the sentiment that the deals cannot be just for our major cities. Other parts of Scotland must benefit from similar amounts of investment if they are not to be, as the committee said, “doubly disadvantaged” in not being part of any deals and seeing proposed investment moving to other areas that are covered by city deals. I am sure that members will be pleased to have heard the cabinet secretary confirm in his earlier remarks that the Scottish Government is committed to 100 per cent growth deal coverage across Scotland.

I share the committee’s views on the importance of local engagement with communities and local businesses. Just as we see with consideration of the Planning (Scotland) Bill, which is another major on-going strand of the committee’s work, low and poor engagement with communities and stakeholders stifles the potential to get the right developments in the right places and attract new investment through infrastructure projects. In scrutinising that bill, we have already heard calls at public engagement events throughout Scotland that meaningful public engagement is absolutely vital.

The committee concluded that local authorities need appropriate resources and the capacity to manage major infrastructure investments through the city region deals. To maintain the consensus in the chamber, I will leave the debate on that subject there, but I welcome the Scottish Government’s response that it accepts that recommendation in our report and that

“the Scottish City Region Deal Delivery Board will consider this specific recommendation and any problems being experienced by local partners as part of its on-going scrutiny function.”

I turn to some of today’s speeches. I am sure that committee colleagues will be pleased that, in his opening remarks, Keith Brown said that the report is helpful and raises a number of significant issues for all the partners to focus on. We look forward to engaging with the cabinet secretary further.

We have heard positive and constructive contributions about the opportunities that city deals present—perhaps that is because we are coming up to recess. Near the end of the debate, it was encouraging to hear how positively Bruce Crawford spoke about the vision and the potential for a deal in his constituency as he walked us through the city of Stirling and the Clackmannanshire region. I know that those who are involved are near to signing heads of terms for that city region deal. There are lots of good things going on there, with great potential, too. His speech, which was very constructive, has given us all an idea about how we can promote our own areas. [

Interruption

.]

The Deputy Presiding Officer:

Excuse me, Ms Lennon. There is far too much chatter going on. Can we have a bit more politeness, please?

Photo of Monica Lennon Monica Lennon Labour

James Kelly talked about the potential for the city deal for Glasgow and the Clyde valley to unlock £3.3 billion of private investment. That is a vast sum of money. However, he also said that city deals are not just an accounting exercise. He rightly talked about having the proper methodology for project selection, and we have heard from a number of members about the importance of having robust and transparent project appraisals.

Kenneth Gibson and Brian Whittle delivered good speeches. Although they came from slightly different positions, both made passionate arguments about a growth deal for Ayrshire.

I cannot miss out Mike Rumbles, who, I think, said that it was the Lib Dems who spearheaded city region deals when they were in government. I am not in a position to argue against that, so we will leave the matter there. He said that city deals are a vehicle not for looking at a list of projects for the short term but for maximising the opportunities over the long term and for strengthening local decision making and institutions.

David Stewart made excellent points about the need to see genuine new investment and not the displacement of jobs into other regions. Claire Baker cautioned against the Edinburgh and south-east Scotland city region deal being weighted towards Edinburgh city. I think that Jenny Gilruth would probably agree with that, given her comments.

The discussion has been lively because members are passionate about the potential in their local areas. That has reassured committee members that our efforts and time were well spent.

The committee is disappointed that we have not yet had a reply from the Scotland Office to our report. Although it would have been good to have had that report before today’s debate, I understand that a response is expected by the end of the week, so we can perhaps mull it over during the recess.

City region deals are partnerships between the two Governments as well as with the local authorities, so it is important that we hear what the UK Government thinks about the committee’s findings. Some of our recommendations on what the prime objectives of the deals are, how they should be governed and how they can be extended to other parts of Scotland need sustained close working between the two Governments.

City region deals and individual projects are an important part of our efforts to stimulate inclusive growth in all parts of Scotland. The Local Government and Communities Committee’s report is a serious attempt to improve how the deals are put together and managed. Bruce Crawford’s point that there has been a maturing as relationships have developed is a good one.

This will not be the last time that we look at city region deals as a Parliament; indeed, the most advanced deal, in Glasgow and the Clyde valley, is set for a gateway review in 2019, which will be another important moment at which to take stock of what has been achieved. We also welcome Audit Scotland’s work in the area, which presents a further opportunity for parliamentary scrutiny.

I thank my fellow committee members, our research, engagement and clerking teams and all the members who took part in today’s important debate.