City Region Deals

27 March 2018

Speech in the Scottish Parliament debate

27 March 2018

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.”

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