Holyrood Committee calls for second phase of Growth Deals to benefit Scotland’s economy, with lessons to be learned

The Scottish Parliament’s Economy and Fair Work Committee has welcomed growth deals in Scotland for their role in providing long-term funding certainty and catalysing projects across the country.

Now, the Committee has called for a second phase of growth deals, rooted in regional economic strategies that are less bureaucratic, more flexible and transparent, and have more private sector involvement.

The recommendation comes as the Committee publishes a report following an inquiry into City and City Regional Growth Deals.

City and Regional Growth Deals are local funding deals agreed between the Scottish Government, the UK Government and local partners. They are designed to drive long-term economic growth across regions by attracting investment, creating jobs and improving infrastructure.

There are currently 12 deals covering the length and breadth of Scotland, each at different stages of their lifecycles. During the inquiry, the Committee took evidence from a mix of newer and more established deals about their outcomes and challenges.

The Committee welcomes the multi-year funding provided by growth deals and the pipeline of work that this creates. It also provides confidence to private sector investors and allows for better planning of major projects. The Committee recommends that the UK and Scottish Governments commit to continuing to provide multi-year funding to promote regional economic growth.

The Committee noted the general agreement that deals provided pace and a momentum to drive projects forward. An example is in the Glasgow City region where, local councillor Susan Aitken told the Committee how projects that “had needed to be addressed for 30 or 40 years” were made a priority because of the increased collaboration across local authority boundaries, and different funding streams working together, fostered by the deals.

Growth deals sit alongside Regional Economic Partnership. The Committee asks the Scottish Government to set out its vision for the future role of the Regional Economic Partnerships and recommends that regional economic strategies should form the basis of a second round of deals – ensuring that a more regional approach is at the heart of Government’s economic strategy.

There have been varying levels of private sector involvement in growth deals. It welcomes the positive example of the Aberdeen City Region Growth Deal which grew out of an existing structure with private sector involvement at its core to secure commitments of £660 million in private investment. The Committee believes that it is vital that lessons are learned and shared from the success of this model.

Partnership working has created more bureaucracy with complex governance structures and untidy lines of accountability. The Committee would like to see more flexibility to enable growth deals to quickly adapt to changing economic circumstances and a more streamlined approach to the delivery of projects within deals. The current ‘green book’ approach to every project fails to distinguish between projects of varying sizes, holding up projects.

During evidence, business representatives told of projects being selected “behind closed doors” and that there is a strong feeling that the small business community does not have a significant voice within the decision-making process for the growth deals.

The Committee believes that it should be easier for stakeholders and the wider community to understand why decisions on certain projects are made. It recommends that the Scottish and UK Governments include this in their review of governance arrangements, and that transparency in decision making should be a condition of an award of growth deal funding, or any funding that comes after the current deals have concluded.

Speaking on publication of the report, Colin Smyth MSP, Convener of the Economy and Fair Work Committee, said:

“The Committee is clear – there should be a second phase of City and Regional Growth Deals. We want to see firm commitments from both the Scottish and UK Governments to continue this investment, but to do so with reform and renewal at its heart.

“Growth deals have shown that long-term, place-based investment can deliver real change – but to tackle regional inequality in Scotland, we need to embed a truly regional approach to economic development. That means ensuring Regional Economic Partnerships are not just associated with growth deals but are central to shaping economic strategy, underpinned by regional economic plans.

“Future deals must be less bureaucratic, more flexible and streamlined – recognising that local partners are not distant decision makers, but are best placed to drive delivery.

“Too often the current process is slow and overly bureaucratic, delaying vital projects and undermining confidence among local partners. We need to see a faster, more streamlined approach that respects the expertise of local and regional bodies to get on and deliver.

“Greater transparency and private sector involvement will also be essential to making sure future growth deals truly meet the needs of communities and local economies. These should be the foundations of a second phase of deals that go further and deliver more.”