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City Deal Funding (Aberdeen)

Volume 597: debated on Tuesday 30 June 2015

Motion made, and Question proposed, That this House do now adjourn.—(Stephen Barclay.)

I very much appreciate the opportunity of an Adjournment debate on the Aberdeen city region deal. The coalition Government announced in the Budget earlier this year that they would enter negotiations with Aberdeen city and shire on a possible city region deal for the area. I appreciate the Minister’s presence to reply to the debate and I am grateful that my hon. Friend the Member for Aberdeen South (Callum McCaig) and I will have a little longer to address the issue.

Since the 1970s, Aberdeen has been one of the major economic powerhouses of the UK.  Our local city and shire economies created 42,200 jobs between 2000 and 2012, a rate of growth double the Scottish average. Aberdeen is ranked fourth among 64 cities in terms of the number of patents per head of population. In 2011-12, the oil and gas industry paid 16.4% of all corporation tax collected in the UK.

Although the oil industry has made a significant contribution to the economy of these islands, many in our city feel that deserved improvements have passed us by. The Government’s “UK Oil and Gas” industrial strategy, published in 2013, summed up the situation. It stated:

“While the strengths of the sector are UK wide, Aberdeen has established itself as a global hub for oil and gas expertise.  This has happened in spite of, not because of its infrastructure.  From a small airport through to traffic congestion and limited housing stock, Aberdeen has struggled to keep up with the demands of the oil and gas sector.”

Major infrastructure projects, which have been in the pipeline since the 1940s, are only just beginning to come through for my residents. The Haudagain roundabout improvement scheme, the western peripheral route and the third Don crossing have been long-awaited by people throughout Aberdeen, but it is only now that these are progressing.

Motion lapsed (Standing Order No. 9(3)).

Motion made, and Question proposed, That this House do now adjourn.—(Kris Hopkins.)

Does my hon. Friend agree that it is great to see the councils of both Aberdeenshire and Aberdeen city working together to secure this deal, which will benefit both the people in my constituency and hers?

I will come on to the point my hon. Friend raises in a few moments.

Our city’s transport connectivity is regularly flagged up as concerning. There is a heavy reliance on cars and high vehicle ownership, as the infrastructure and connectivity are sadly lacking at the moment. The city deal proposal highlights an opportunity for change to be made. Increasing the transport links will allow public transport in the city to become more fit for purpose and to encourage a reduction in car use. Aberdeen’s Union Street has degenerated over the years, as private companies have bought up properties and shirked their responsibilities in terms of maintenance and upkeep. I hope and believe that the city deal and the level of collaboration between organisations can ensure that agreement is forged on a way forward for our city centre. We want the local population to be drawn into the centre, to share experiences in a pleasant, welcoming environment, and to feel proud to live and work in our beautiful city.

Increasing the ability of companies to attract talent to our region will increase our economic output. I am so pleased that Aberdeen City Council, Aberdeenshire Council, Robert Gordon University, Aberdeen University, the local business community, the Scottish Government and the UK Government are working together to progress this proposal.

I had the pleasure of working with Aberdeen as part of the Scottish Cities Alliance. Many of the organisations my hon. Friend mentions have been critical in pulling together the project for Aberdeen. As a representative of the other most northerly city in Scotland, Inverness, the links between Inverness and Aberdeen are very clear. The generation of employment and our ability to retain and encourage young people into new careers are vital. That work together was best demonstrated in the work of the Highland Council at the advanced stage, before the election was called, with the Scottish Government, the Scottish Cities Alliance, the universities and other groups involved in pulling together the campus and sports hub for young people. Does my hon. Friend agree—

Order. I am trying to be as generous as I can. They are interventions, not speeches. My quick advice would be: if you have a long intervention, do it in two stages.

I agree with my hon. Friend. Although there are local issues, both Aberdeen and Inverness have the same concerns regarding the current lack of connectivity with the rest of the country. Anything that improves our access to the rest of the UK will improve economic opportunities for those living in our city regions.

Thank you for your advice, Mr Deputy Speaker. Does my hon. Friend agree that this is an opportunity for the UK Government to demonstrate a commitment to the cities and regions in our area, which is the most northerly part of Scotland and the UK?

Absolutely. That is very important. As I said, there has been a level of concern from some of our residents that we are a bit forgotten about, because we are so far away. We need to work to change that.

The city deal for Aberdeen is a truly excellent example of joint working, not just between the two Governments, where relations have occasionally been strained, but between the two councils, where this level of joint working simply has not been seen before.

One of the most difficult problems for those living in Aberdeen city and shire is the cost of housing. There is a lack of affordable accommodation, and our councils and NHS are finding it difficult to keep key workers. In recent years, we have struggled to recruit and retain teachers, social workers and nurses. With high land values in Aberdeen, it is really difficult for social landlords to fund the building of new social housing. For years, the city’s social housing stock has been reducing, and there are thousands of families on the council’s housing waiting list. Despite some recent new builds, many are still stranded in inappropriate accommodation or forced to consider moving to other parts of the region or country.

The city deal proposal includes a £350 million ring-fenced loan guarantee facility from Infrastructure UK for housing in Aberdeen city and Aberdeenshire. It also proposes a significant increase in the number of homes available for lease from both councils. As I mentioned in my maiden speech, the lack of suitable affordable housing is a huge problem for my constituents, and the issue is exacerbated by the success of the oil and gas sector. I really cannot overstress the importance of this issue to people living in Aberdeen.

My hon. Friend makes a crucial point about social housing in Aberdeen, but does she also accept that the investment in the Inverness-Aberdeen railway line will make realistic commuting possibilities available to a range of people across the community? Does she agree about the importance of that investment and our working together to maximise the opportunity?

I absolutely agree with my right hon. Friend. The infrastructure system in London is so far away from our system. We do not have two railway lines beside each other, meaning that trains can only pass at certain points.

Yes, we do have trains, unlike in some parts of northern Scotland. We are very lucky. The upgrades to the line, however, will make a significant difference to commuters. A huge number of people commute already, particularly from regions in the north-east, and if we can improve the railway line, particularly by dualling it in places so that more trains can pass, that will only improve our connectivity.

We need to ensure that our population continues to live and work successfully in the area. In Aberdeen, we have low unemployment, at just 2.3%, but 25% of our working age population earn under £15,000 a year. Large salaries are pushing up the cost of land and the price of housing, however, so we need to ensure that those on lower wages have access to affordable or social housing, both of which have been sadly lacking in Aberdeen throughout the past 20 years. Lower housing costs increase people’s and families’ disposable incomes, which boosts the local economy by increasing spending.

In order to sustain the oil and gas industry and unlock future opportunities, we must act now to ensure that Aberdeen continues to be a competitive region and a global centre of excellence. With the challenges of a mature field and a low oil price, we need to get very good very quickly at performing in this new environment. Aberdeen and Aberdeenshire need to become world leaders at things such as decommissioning—we have the talent and skills locally and the ability to export those skills as other fields across the world reach the end of production. We have the export infrastructure—we are very good at it and we do it a lot—but we need to be doing the same for things such as decommissioning. We can be world leaders in this. We also have a huge pool of talented engineers, scientists and industry experts in technology, which means that Aberdeen is uniquely placed to take the lead for the UK in renewable technologies as well.

I look forward to hearing the Minister’s views on the Aberdeen city region deal. I am keen to hear whether he can provide us with more information on the timeline going forward. This is a long overdue and positive initiative for our wonderful city.

I thank my hon. Friend the Member for Aberdeen North (Kirsty Blackman) for securing this debate and echo her words of gratitude to the Minister for generously allowing me to contribute.

This is a hugely important matter for Aberdeen and north-east Scotland. Following the collapse in the oil price, Aberdeen City Council hosted a summit of key industry and Government figures attended by local government, the Scottish Government and the UK Government. At that conference, Malcolm Webb, the former chief executive of Oil and Gas UK, said:

“Currently I am afraid Aberdeen is part of the cost and efficiency problem whereas, with the right investment in its infrastructure, it can be an important part of the solution.”

The oil and gas industry clearly has a job of work to do to reduce its own cost base, but when someone so key in the industry suggests that the very infrastructure and nature of the city and region that host that infrastructure, are part of the blockage and cost difficulty, everyone with a vested interest in seeing Aberdeen flourish—this Chamber as a whole—needs to listen.

My hon. Friend is making an important point about infrastructure. Nowhere are the infrastructure challenges more acute than in the very north of Aberdeenshire, particularly in the parts that I represent. The city deal offers great opportunities for the city and the shire, but I am concerned to ensure that the rest of Aberdeenshire that will not be affected by the city deals does not fall further behind. Will my hon. Friend agree to make sure that that does not happen as we go forward?

I welcome that intervention. It may not have been heard by those in the Chamber, but while my hon. Friend the Member for Aberdeen North was talking my hon. Friend the Member for Banff and Buchan (Dr Whiteford) pointed out that her constituency is perhaps unique for a mainland constituency in not having a single mile of railtrack. That is quite remarkable, and I know that Aberdeenshire City Council is working in partnership with Nestrans on this issue for the future. It is something that could be developed through this process.

Councillor Jenny Laing, a Labour member and leader of Aberdeen City Council said:

“The proposals we have outlined will ensure the prosperity of our city and NE Scotland for decades to come by anchoring an economy of global significance for the benefit of the UK as a whole.”

This has the backing of Labour party in Aberdeen, and indeed of all parties in Aberdeen, and I think it has unanimous support in Aberdeenshire as well. This is a cross-party issue, although as a result of the success of the Scottish National party, only SNP Members from the north-east of Scotland are here to back it. If other parties were present, I am sure they would be adding to the calls for this, such is the importance of it to our region.

The oil and gas industry is critical to Aberdeen and the north-east of Scotland, but Aberdeen and our region is far more than oil and gas. There are proposals, subject to legal challenge by a certain presidential candidate, for a wind farm in Aberdeen bay to test the new and innovative technologies in offshore wind. I hope that that will go ahead, as there are huge benefits to be gained from it.

Aberdeen is also leading the way in the development of hydrogen technology. We now have the largest fleet of hydrogen buses anywhere in Europe, thanks to the support of my right hon. Friend the Member for Gordon (Alex Salmond) and the efforts of the Scottish Government, the European Union and Aberdeen City Council. It is a team effort.

Yes, we are an energy city and an energy region—but we are certainly more than just energy. Life sciences and food and drink are absolutely world class in the corner of the world that we call home. They, too, stand to benefit from significant investment in the infrastructure—physical and digital, and in the housing that my hon. Friend the Member for Aberdeen North talked about—and, above all, in the skills we require from our universities to build the capacity to allow these industries to flourish.

My hon. Friend makes an important point about infrastructure. One concern that I and my Glasgow colleagues have is about the devolution of powers to cities such as Manchester. That is, of course, to be welcomed, but it presents us with significant challenges. Does he agree that one way to help us meet those challenges would be for the Government to say unequivocally that HS2 will come to Scotland?

Aberdeen stands to lose out to a degree when it comes to HS2, but as part of team Scotland, I would say that there is a requirement to bring it to the central belt of Scotland. If that is to happen, there needs to be protection for Aberdeen— and, I am sure, for Inverness—given the potential for them to lose out. That would come in the form of landing slots and access to hub airports. It will never be economical to put high-speed rail up to the north-east of Scotland or the highlands, but we need connectivity to London and to the wider world through our airports.

Beyond the city deal and the physical infrastructure is the investment in skills and the utilisation of our world-class universities. Aberdeen University is a proud and ancient seat of learning, and Robert Gordon University is equally proud, if slightly younger. The two of them together make an immense contribution. We have some of the brightest and most talented young people from across the globe coming to study in our universities because of the contribution they make and the expertise they have. As I mentioned, it is not just in oil and gas; the bio-science and medical sciences provided in our universities are absolutely leading in terms of world-class research.

There are proposals for university enterprise zones elsewhere in the country. Part of the deal would be to allow that to happen through the combination of Aberdeen University and Robert Gordon University and by bringing business and the universities closer together, giving businesses incentives to invest in the research and development in which our universities can take part. That is an exciting development which will allow our universities to make a far greater contribution to the economy than the significant contribution that they already make.

Throughout my lifetime, Aberdeen has prided itself on being Europe’s oil and gas capital, and that has contributed immensely to the wealth of our city. The investment that it should, perhaps, have attracted in previous decades was absent, but let us be forward-looking. Aberdeen has a great future as an oil and gas city—indeed, as a global energy hub. Renewable energy will play a part, as, I hope, will hydrogen, but, above all, we will remain a key hub for oil and gas.

Much of the work that is done in Aberdeen now has little relevance to the North sea. The city is home to engineers who assess projects from the gulf of Mexico to Brazil, and from the coast of Africa to Kazakhstan and the South China sea. It is truly a global hub. The clusters of expertise, experience and knowledge that exist in our city and our region are absolutely world class. But—and there is a but—there is no guarantee that we will continue in that role. We need investment now, because otherwise we may face the prospect of losing the goose that lays the golden eggs.

Internationalisation is a key element. We need support for our exports, and support to enable our industries to find new markets. Many have done so already, but a huge number of smaller companies that could save huge amounts of money, in terms of oil and gas production, need to be helped to take their innovative products to further markets overseas. Investment in broadband is important in that context. The technology that handles seismic data, or project plans, that are produced from offices in Aberdeen is incredibly data-hungry. Huge band widths are required to allow information of such a size to be communicated to markets throughout the world. That investment will potentially provide far greater work for companies based in Aberdeen and the surrounding region.

The mood music that we hear from both councils, and from the Scottish and United Kingdom Governments, is very welcome. Clearly there is a job to be done, but I hope that convincing the Minister of the importance of the deal will help that work to be achieved. We realise that negotiation between the councils will be necessary at various levels, but it is incumbent on us, as representatives of the area, to press the case. The deal is vital to our region and vital to the economy, and it has the potential to deliver huge dividends not just to our area, but to the United Kingdom as a whole.

I congratulate the hon. Members for Aberdeen North (Kirsty Blackman) and for Aberdeen South (Callum McCaig) on their speeches. I noted the tone of their contributions with great interest. The hon. Member for Aberdeen North said that she sometimes felt that her area had been forgotten by Westminster, and I understand what she means. As a Teesside Member of Parliament, I sometimes felt the same in years gone by, although, thankfully, not under the present Administration.

I am aware of Aberdeen’s valuable role. Durham Tees Valley airport, half of which is in my constituency, has been partly sustained by regular flights to Aberdeen because of the economic links between the hon. Lady’s constituency, that of her hon. Friend the Member for Aberdeen South, and my own. The hon. Lady has sent a message to someone who is receptive to it, if I may put it that way, and I commend her for the tone in which she has done so.

I have always found that, while there are matters on which we disagree across the House—no doubt more will surface as time progresses—there are also areas of commonality. It is in all our interests to enable every part of our economy to achieve its potential. My experience may be limited in comparison with the experience of others—I look at the right hon. Member for Gordon (Alex Salmond) as I make that comment—but so far I have found that a positive approach which, while recognising the challenges faced by our constituencies, trumpets the opportunities that they present, the great things that they do, and the fact that they are wonderful places that we are fortunate to represent in the House, produces the best reaction from those whom we want to persuade that our own particular constituencies deserve investment and support.

The Government’s economic ambition is to create a fairer and more balanced economy by supporting policies that enable it to grow. We recognise the challenges and opportunities that exist within local economies right across the United Kingdom, and we have been clear that a one-size-fits-all solution from Whitehall will not work: every part of our economy needs to fulfil its potential. That is why we are devolving powers to cities, towns and counties, and allowing local people to take control of the economic levers in their areas. That work started in the previous Parliament, in no small part with the city deals.

The Government recognised that, to improve the performance of our cities, new solutions were needed. Through bespoke city deals, we have seen the right of initiation pass from Whitehall to town hall. It is a fundamental shift in the way in which Whitehall works. City deals were originally negotiated back in 2012 with the eight core cities in England, and that has been followed by a further wave of city deals across the UK.

In August 2014, the Government, alongside the Scottish Government and the Glasgow and Clyde valley local authorities, extended that model up to Glasgow and the Clyde valley. That deal is one of the largest ever agreed, and local partners anticipate that it will create 29,000 jobs and lever in more than £3 billion of private sector investment. That is an example of what can be achieved when all levels of Government, business, universities and the voluntary and community sectors work together to promote economic growth.

City deals are an important part of the Government’s approach to improving economic growth locally, but we should also remember that they are only one part of the entire package. The Scotland Bill, which is being discussed at some length in this place, will make the Scottish Parliament one of the most powerful devolved Parliaments in the world. It will increase the financial accountability of the Scottish Parliament through devolution of the rates and bands of income tax, air passenger duty and the assignment of VAT revenues; increase responsibility for welfare policy and delivery in Scotland; increase the scope for scrutiny by the Scottish Government of a whole range of public bodies; and give significant new responsibility for areas such as roads, speed limits, onshore oil and gas extraction and consumer advocacy and advice. The Bill honours the commitment made to Scottish people before the independence referendum to transfer significant new powers to the Scottish Parliament.

The Minister has said that under the proposals the Scottish Parliament will be one of the most powerful devolved Parliaments in the world, but the Command Paper said that it would be almost as powerful, in financial terms, as a Swiss canton. Would it be possible to aspire to be more powerful than a Swiss canton in financial terms?

I have no doubt that the right hon. Gentleman has grand aspirations and that it is possible for him to hold them, but my contention is that what this Government are delivering is very significant indeed and meets the obligations and promises that were made in the referendum campaign.

I have provided the context, but what about the city deals themselves and where we are going? City deals are very important because our cities can be drivers for growth. UK cities account for 74% of our population and 78% of all jobs, and it is in the interests of everyone in the UK that cities are able to achieve their potential. Economic growth itself does not just happen—it happens in specific places.

Ensuring that our cities are globally successful is not going to be easy, but I believe that it can be done through active collaboration between Whitehall, the Scottish Government and local authorities that recognise its value.

Last Friday I had a meeting with the Glasgow chamber of commerce. Investment that we would have thought would come to Glasgow is already being picked off by cities such as Manchester, following the promise to deliver more powers to them. That is a great concern to me as a Glasgow MP and to other colleagues. The chamber of commerce believes that we could meet that challenge if we got a solid commitment that High Speed 2 will come to Scotland and perhaps even start there. Will the Minister at least endeavour to look at that in more detail? I appreciate—

Order. Perhaps I can help, because I am frightened that we are going away from Aberdeen. Of course, I am very interested in Manchester myself, but this debate is not about High Speed 2 to Glasgow. I can see the connectivity, but we need to keep the Minister on subject of the debate, which is funding for Aberdeen.

Thank you, Mr Deputy Speaker. The hon. Gentleman’s comments have been heard loud and clear. They will be recorded as part of the debate and no doubt properly taken into account. I appreciate that he intends to be a consistent advocate on this matter, and I suspect that this is an issue that we will discuss again.

I very much agree with the hon. Members for Aberdeen North and for Aberdeen South on the important role that Aberdeen plays in supporting the UK economy. We are determined to make the most of that, which is why the Chancellor announced in the Budget in March that we would begin negotiations with both Aberdeen and Aberdeenshire on a potential city deal. Those conversations are ongoing and my officials are continuing to have a constructive dialogue on the potential deal with officials from the two local authorities and with the Scottish Government. As I have set out, a key feature of any potential city deal is that it should be bottom up. This is about places putting forward proposals that will drive their economy forward and about recognising that different places need different things.

Does the Minister agree that this is a really good opportunity for joint working, and does he have any more information on the timeline for any agreements and for when the negotiations will reach a conclusion?

The hon. Lady’s intervention brings me neatly to my next point, in which I want to spell out clearly that each agreement must be a genuine deal, with offers and asks on both sides, and that the onus remains on Aberdeen and its partners to develop a credible proposal. This is something that we want to see delivered, but there is a process that needs to be gone through in order to deliver it, to ensure that any deal is robust, that it offers value for money for taxpayers and local people and that it delivers what it is supposed to for the people and the economy of Aberdeen. I am happy to confirm that my colleague, the Under-Secretary of State for Scotland, will be happy to meet the hon. Lady and her colleague to discuss this matter further, and I look forward to my officials working with those on the ground who want to deliver this city deal, so that we can all benefit from its ultimate success.

Question put and agreed to.

House adjourned.