‘Diversifying our economy away from oil and gas key’

Civic and business leaders discuss potential of City Region Deal

Proposed public funding from the £ 3billion Aberdeen City Region Deal could reel in up a further £9billion in private sector investment, an audience heard yesterday.

The figure compares to the £3.3billion estimated private sector contribution expected on top of the £1.13billion Glasgow and ClydeValley deal, oneof the first of such Scottish and UK government-backed projects to get off the ground in Scotland.

Both local authorities in Aberdeen and Shire are putting together a final proposal for the funding package to submit to government representatives at the end of the month.

But attendees of a packedeventonthe subject of the city region deal proposals heard “there is no timeline" for completion of the bid to win government backing of the ambitious plans.

Jim Savege, chief executive of Aberdeenshire Council, said he hopes to “get a conclusion this financial year".

Angela Scott, chief executive at Aberdeen City Council, confirmed that there have been 8,000 job losses in the north-east due to the effects of the oil price crash.

“That is significant harm being experienced by the people and the place of Aberdeen and the north-east," she observed.

Speakers at the event hosted by the Aberdeen and Grampian Chamber of Commerce underlined the need for the money from any city deal to be used to diversify the economy from its reliance on oil and gas.

Nevertheless, a proposed oil and gas technology centre is one of the key “asks" of the city region deal proposals.

Other ambitions of the bid include having the power to charge a tourism levy to support the growth of the sector and support the establishment of a destination management organisation.

In housing, the partners want to offer guarantees to housebuilders to “build out in the scale we wish to have”.

Mr Savege added that any investment in an oil and gas technology centre would “then start to support and enable growth in technology across other sectors".

Mr Savege said the process for the city region deal started back in spring 2014, about the same time GlasgowCity Councilembarked on its bid.

“Quite often people ask what is the set timetable. The easy answer is there isn't one,” he said.

“We are working at the moment for our next submission for the end of November where we are going to be bundling together the latest set of propositions, the economic strategy and some economic modelling we have been doing. We are hoping to get a conclusion this financial year in terms of city region deal.”

Jennifer Craw, executive advisor to Sir IanWoodand chair of the board of governors at RGU, said the region had to continue its focus on maximising economic recovery in the North Sea.

This still offered a “huge prize" for the UK, while also focusing on the development of other sectors.

She described the region's life sciences sector as a “hidden gem" and highlighted to need to also focus on the food and drink sector, agriculture and financial services.

“It is essential that the north-east wins the city region deal," she added.

Stephen Phillips, partner at law firm Burness Paull, was involved in drawing up governance and assurance schemes for the Glasgow city deal.

He explained the proposals would require strong oversight in order to trigger various tranches of the funding, which would be handed out over the next 20 years.

He said there were challenges that needed to be addressed if the city region deal was to be a success.

“The essence of a city region deal is that public sector investment is frontloaded in infrastructure, skills and innovation, based on the tax receipts from the extra economic activity that generates.

“That growth in economic activity is tracked and tested objectively at each gateway review.

“We have to bear in mind that the optimism that comes at this stage of the development of the city region deal is that if those targets are not met, then the deal will be curtailed.”

“Quite often people ask what is the set timetable. The easy answer is there isn’t one”

EXPERT: Jennifer Craw said the north-east had to focus on maximising North Sea recovery