Meeting of the Parliament 05 October 2017
Strengthening Scotland’s economy so that it benefits all is the very definition of inclusive growth and is front and centre of what the Government is all about. We are using all the levers at our disposal. Recent data shows that the economy is growing, though we want it to grow at a higher rate. The number of people in employment is at a record high and unemployment is at a joint record low.
Cities and their regions are the engines of our economy. Increasing jobs, investment and employment in our city regions will drive up national economic growth. City region deals are one of our key economic levers. Eighty-three per cent of Scotland’s population—4.5 million people—live in the areas that are covered by existing or planned city region deals. According to the latest figures, which are from 2015, those same areas account for 86 per cent of Scotland’s gross value added and 2.2 million jobs, which is 85 per cent of the total number of Scottish jobs.
The investments that we have made in city region deals can be transformational. They will benefit Scotland as a whole, creating tens of thousands of jobs and upskilling labour markets. However, deals can do much more than that. They galvanise key partners to come together to drive regional economies in ways that go well beyond the investments that they deliver.
So far, the Scottish Government has committed over £1 billion over the next 10 to 20 years for city region deals in Glasgow, Aberdeen, Inverness and Edinburgh. Our investment exceeds the United Kingdom Government investment in the deals. Indeed, the Scottish Government is the biggest funder of city region deals in Scotland.
The deals are based on proposals developed by cities and their partners, harnessing local intelligence to identify what is needed to unlock inclusive growth. City deals are important investments and they can attract significant private sector leverage, but we must see them in context. Over the past five years, local government in Scotland has received more than £3.5 billion capital funding through the local government settlement. This Government has made significant investment to transform Scotland’s infrastructure. In 2017-18 alone, we have committed more than £4 billion for projects such as the Queensferry crossing, the Aberdeen western peripheral route, the A9 dualling programme and rail improvements between Edinburgh and Glasgow. To cap that list, over three years we have seen four deals. That is solid progress.
Today I express our commitment to deals for all our cities and confirm to Parliament that the Scottish Government will support city deals for Stirling and Clackmannanshire and for the Tay cities, which will be the first two-city deal in Scotland. In addition, I want to seek clarity and achieve consensus where possible with other partners on how all Scotland can benefit from the deals that we strike.
The first deal was, of course, Glasgow. That deal is in its delivery stage. Along with the UK Government, we are supporting £1.13 billion of investment in Scotland’s largest city and region, which is levering in about £3.3 billion of private sector investment.
In Aberdeen, we are investing £125 million over the next 10 years, with match funding from the UK Government, to deliver projects including a new oil and gas technology centre and harbour infrastructure. When we struck that deal, we were clear that more was needed for the north-east, so the Scottish Government alone committed to investing an additional £254 million in transport, digital and housing.
In January, I signed the Inverness and Highland city region deal, committing up to £135 million over 10 years as part of a £315 million package. That investment will deliver jobs, drive innovation, attract greater private sector investment and—crucially for the Highlands—help to retain the young people who are the lifeblood of the region’s future.
In Edinburgh, after some hard negotiations with the UK Government to encourage it to match our ambitions, we signed heads of terms in July to invest £300 million over the next 15 years in the Edinburgh and south-east Scotland city region deal as part of a £1.1 billion package.
That is where we are, and we plan to go further.
We have discussed in the chamber on a number of occasions the enterprise and skills review. In our review report, which we published in June, we set out our commitment to support the creation of regional partnerships across the country.
Our national economic development agencies have been challenged to align regionally to support regional partnerships, and they have been proactive in doing that. We are very clear that future city and regional deals will be expected to use our inclusive growth model to prioritise their investments and monitor their progress. We are also clear that private sector involvement in the partnerships is crucial and that the Scottish Government—I think that this is also true for the UK Government—will make its funding contingent on the involvement of the private sector.
In each of the deals that I have talked about, we have leveraged private investment to support regional development. I am delighted with that, and I am sure that we can do even more. The private sector has to be an engaged partner, providing drive and direction to our regional economies. In parallel, and very importantly, the Equality and Human Rights Commission is working with us to maximise equality of opportunity within city region deals.
As I have said, we intend to achieve city region deals for Stirling and Clackmannanshire and for the Tay cities of Dundee and Perth, alongside their partners in Angus and the north of Fife. Officials are working with both sets of regional partners and with the UK Government, so that we can reach agreement on heads of terms as soon as possible. I will continue to press the UK Government to match our commitment to transform those regional economies.
Our policy approach should not just be about cities and their regions, extremely important though they are. For our economy and all our people to flourish, we need inclusive economic growth in all of Scotland, especially outside the traditional growth areas.
As I said at the start of my statement, inclusive growth is about opportunities for everybody. To that end, we have said that we are supportive of a growth deal for the three Ayrshire councils, which would be the first regional deal in Scotland. Ayrshire’s economy has lagged behind national growth for too long and it is time to take decisive action. We are determined to deliver a deal that will bring jobs and investment to the area, reduce unemployment and reinvigorate the local economy.
We are also committed to tackling the economic challenges faced in the south of Scotland, so as well as our commitment to establish a new south of Scotland enterprise agency—we are the first Government to do that—we are looking at a border lands inclusive growth deal. We are entering into detailed discussions with Dumfries and Galloway and Scottish Borders to explore a deal that supports their aspirations.
We have had discussions with Moray, Falkirk and Argyll and Bute. Each has growth proposals, while Orkney, Shetland and the Western Isles seek an islands deal.
I am willing to play my part and to work closely with the UK Government to agree the next phase of deals. We have had good co-operation, to this juncture at least. We had good co-operation with Andrew Dunlop when he was in post, but I call on the UK Government to play its part, match our commitment to support inclusive economic growth for all Scotland and, crucially, develop a coherent and planned programme. By that I mean that it is not clear to me what role the UK Government wants to play in different parts of Scotland and it would be useful for us to know that before we proceed with any further deals.
I have given a clear picture of our plans. Our existing deals are delivering jobs and investment for Scotland. The £1 billion committed so far to city region deals is a clear signal that we respect the knowledge of regional partners, who are best placed to identify what is needed to unlock inclusive growth in their regions. The point is that the cities and their partners produce the proposals. Of necessity, we and the UK Government have to prioritise which of those we accept and support, but the cities come up with them in the first place; the proposals are not made by either of the two Governments.
We are also expanding our regional economic policy to go beyond city deals and we will support the creation of regional partnerships across the country. However, I want a clear commitment from the UK Government that it will work in partnership with us to deliver transformational city region deals for Stirling and Clackmannanshire, the Tay cities and the other areas that I have mentioned.
I have said repeatedly that I am willing to work with the relevant UK ministers to help to achieve the aspirations of the industrial strategy. To achieve that, I call on the UK Government to help to develop a co-ordinated approach to all of Scotland, including working with us in relation to all areas, including the Ayrshire regions, Argyll and Bute, Moray, Falkirk, the border lands and the islands. For my part and on behalf of the Scottish Government, I commit to working collaboratively with all our partners to ensure that we get the best deal for cities, regions and the whole of Scotland.