Deal or No Deal?

by Ken Gibb

Last night, Policy Scotland and the University invited the leader of Glasgow City Council, Gordon Matheson, to talk about the future of the City in the context of the recently agreed City Deal for Glasgow and the Clyde Valley. At a well-attended event, the city’s political leader covered a wider range of topics centered on the notion of the city-region, and the metropolitan economy as key economic driver of the future.[1]

When it was announced, I blogged about the City Deal (September 1 2014), a 20 year project, supported by both the Scottish and UK Governments and signed up to by all eight local authorities and valued at £1.13 billion. This is for the core infrastructure fund described as a ‘once in a generation’ investment. Complementing this will be a range of life science, business support and labour market schemes. Over the life of the City Deal, its proponents argue that it will create an additional 29,000 jobs across the city region (on top of 15,000 construction jobs), active labour market work with 19,000 unemployed residents, and it will lever in a further £3.3 billion of private sector funding.

The lion’s share of the public funds comes from UK Government and the Scottish Government (equally) [2]  but there is also a contribution from the partner councils. It is a binding long term agreement aimed at boosting national economic growth led by the city region over 20 years. It is intended that this will be capital funding for an infrastructure fund (20 projects across the city-region), an innovation fund and support to combat youth unemployment and to help low income workers progress through their careers. The infrastructure projects include a train route from the airport (a long-standing plan), land decontamination on the Clyde Waterfront, unlocking new housing sites in Lanarkshire, and harbour investment in Inverclyde. The Innovation work includes the University’s stratified medicine investments as part of the ongoing Southern General hospital project.

The Glasgow city deal is the largest in the UK and the first in Scotland. But there have been critics. How will the monitoring and accountability mechanisms ensure project delivery, implementation and private sector leverage? Will learning lessons be drawn on from other city deal projects? The public funding is argued to be less impressive when looked at annually. However, like the Commonwealth Games investment, it is to an extent about providing certainty about long term projects, accelerating their development and providing the strategic coherence that long term funds can provide. Also in an echo of the Games, the council leader pointed to the continuing collaboration benefits from the Clyde Valley councils working together in partnership – mainstreaming new ways of working. However, it was striking to place the City Deal in the context of the University’s campus redevelopment plan which involves somewhere between £500-700 million investment in the city’s west end when the University takes over the western infirmary site and in partnership with the city will remake a large part of that quarter of the city.

The council leader’s lecture was peppered with urban studies references: Glaeser, Katz, Leo Hollis, as well as nods to Richard Florida. For instance, on climate change, he cited the athletes village in Dalmarnock as the biggest carbon neutral development in the country and further major recycling plans at Polmadie as well as for combined heat and power across the city. This line fitted with his espousal of Glaeser’s defence of the contemporary environmental policy record of cities, the promotion of compact cities, active travel and higher densities.

It was also from this basis i.e. the metro revolution and city regions as key engines of economic prosperity that Matheson argued for stronger city-region fiscal and functional devolution. He contended that Scotland lags behind English urban policy where city deals are now established in all city-regions, where ‘Devo Manc’ is city deals on stilts’ but in comparison Scottish city-regions lag behind. He referred to the recent Respublica research that suggested the UK was one of the most centralised systems of local government given the dependence in central grant. The position was posited as even worse in Scotland (requiring 80% of grant in aid to fund services). Moreover, the council tax freeze, now in year 8, meant that if Glasgow raised its council tax at the margin it would face claw backs of £75 million.

Matheson went on to argue that while the political classes were focused via the Smith Commission on more powers for Holyrood they were weakening the scope for empowering dynamic city regions. He called for more devolution but less power for Holyrood and Whitehall. He identified a paradox of more devolution to Scotland but yet greater centralisation. More fiscal powers might help to address the imbalance between the core city (600,000 plus population) and the surrounding urban system (1.75m in total) in terms of paying for services provided by the city. Glasgow is a member of the UK Core Cities group and leads on smart/future cities – they see this lobbying collaboration as the way forward.

Gordon Matheson identified a number of functional areas that the council should have greater powers over, one of which was welfare. I asked him what he meant and in particular if he thought council should have more control over welfare benefits. He said he was more concerned with making welfare reform more humane and also that policies that work at a local level should not be compromised unnecessarily by similar but different policies at a higher level of government. A specific example of this was the living wage 12 month wage subsidy policy established in Glasgow provided by the council thereafter followed by an Scottish Government 6 month policy based on the lower minimum wage – sowing confusion among employers.

It was an interesting evening. There is opportunity associated with the city deal and further inter-council collaboration in the Clyde Valley. But there are also huge challenges in terms of revenue spending cuts and austerity that will need to be accommodated. The issues concerning devolution to council levels, fiscal powers and decentralisation chime with what Policy Scotland raised in its own submission to Smith. It was also significant that Glasgow sees itself now as part of a network of UK and international cities, drawing on urbanists and evidence that might promote learning about how to help support urban economic growth.

There is clear complementarity between the agenda set out by Matheson and that found in the Strengthening Local Democracy prospectus. Moreover, devolution was also not seen to stop at the city chambers – there was also much discussion last night about the enhanced role of community partnerships, area partnerships and proposals for community budgeting at the local scale. How this will work in practice is a key element in the What Works Scotland Glasgow case study that will proceed over the next three years.

Finally, there was the dog that didn’t bark – will there be renewed calls for city deals for Edinburgh and further up the east coast to Aberdeen and Dundee? What might that mean if more of Scotland followed the UK urban policy route?

1. A more party political and less policy-focused account of the lecture can be found in the Herald, November 6 2014, ‘Matheson: Sturgeon is stifling revolution for cities’

2. This is an updated version of this post. David Waites pointed out correctly that SG and the UK Government both put £500m into the pot – not, as I had originally suggested that more had come from the UK end. Mea culpa.