Local Government and Communities Committee

Meeting date: Wednesday, November 1, 2017

Official Report 664KB pdf

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City Region Deals

The next item on the agenda is the first evidence-taking session in the committee’s inquiry into city region deals. I welcome Professor Duncan Maclennan, who is from Policy Scotland at the University of Glasgow; Dr Peter O’Brien, who is a research associate at the centre for urban and regional development studies at Newcastle University; Lesley Warren, who is policy and public affairs officer for the Coalition for Racial Equality and Rights; Barry McCulloch, who is a senior policy adviser at the Federation of Small Businesses; and Chris Day, who is a policy adviser at Transform Scotland.

I thank you all for coming along this morning. I am sorry for the slight delay in starting the item. We will move straight to questions.

To be blunt, the background to our inquiry involves the concerns that some members of the committee have had around the Glasgow city deal. My opening question is a general one. You do not all have to answer this question, but anyone who wants to can do so.

Have you made a comparison between the deals that exist in England and the Scottish ones—particularly the Glasgow deal—to see how they are operating and whether there could have been improvements in any of the Scottish deals?

I can be a bit unobservant, so please try hard to catch my eye if you are desperate to speak.

I should make it clear that I am speaking in my academic capacity rather than as a commissioner on the Glasgow city deal, but I will happily tell you what I think of the process.

The Glasgow city deal arose through a process that was in many ways similar to the processes around the larger deals in England, although there were exceptional political circumstances in the period of its formation and it was formed very quickly. Like a lot of the other deals, it focuses heavily on transport, which was a characteristic of all the early deals. That arose as a result of what I view as a technical mistake relating to the fact that the cost benefit analysis in transport always gives people hard numbers whereas other infrastructure issues that might be more supportive of growth and productivity are much more difficult to put figures to.

I do not think that any of the city deals have identified the infrastructure that is required to enable the creation of productivity and innovation districts, and I do not think that they have been used imaginatively in the UK. For five years, I served as the chief economist in the federal department for infrastructure in Canada. When it is dealing with infrastructure programmes, it looks closely at how innovation districts can be created in cities such as Toronto and so on. The approach in relation to Glasgow was similar in that regard.

The difference between the Glasgow city deal and those in England is the Scottish Government’s emphasis on inclusive growth, which has meant that the discussion about where the impacts fall and who benefits has been more acute than it has been in relation to the English deals. The particular arrangements whereby there is a commission—chaired by Anton Muscatelli—rather than just a national evaluation has put a bit of focus on those issues and has enabled a fair amount of economic scrutiny of what is going on in relation to the set of projects that are involved in the Glasgow city deal.

The Glasgow city deal is similar to the English city deals in some regards but different in others. Establishing that was part of the point of the exercise that we have been engaged in. All the city deals were bespoke.

Part of the challenge is that these things are not static; they are evolving as we sit here and discuss the issues.

We have done research across the UK but also, increasingly, in Australia, where city deals are being developed. In England, right at the outset, the coalition Government at Westminster had an appetite to remove any notion of overt performance management, metrics or a sense of benchmarking and measuring around the delivery of the city deals. Ministers in that Government were clear that they wanted a clean break from what they saw as the target-driven culture of the previous Government. We understand that civil servants were informed that they should not instigate a national or an English performance management framework.

When ministers asked how these things were doing, it proved difficult to answer the question, and a system had to be introduced retrospectively across the city deals in England. To some degree, it is still early to say, but the process that was set up did not help matters. We now have gateway reviews, for example, and I think that the city region deals in Scotland have learned from the English city deals. Right at the outset, though, how the performance of the English city deals was to be measured was part of the problem—there was no framework in place to deal with that. Of course, the Government would say that it was up to local areas to do that work, but we would argue that the situation was quite problematic.

11:30  

Do our other witnesses have any observations to make?

Building on previous comments and addressing your question directly, I think that those concerns are shared by small businesses with regard to the Glasgow deal, the other two operational city deals and the three city region deals that are in the pipeline. This is not a Scottish phenomenon, but there are big concerns about the lack of transparency at the development and implementation stages and the lack of more inclusive and discursive engagement with the private sector.

If you have tried to piece together the puzzle of city region deals in Scotland, you will find it quite a challenge to gauge questions such as how much is being spent, where it is being spent and why it is being spent there. When you ask or try to answer some of those questions, you are struck by the scale of it. We are looking at somewhere in the region of £4 billion to £5 billion over 10 to 20 years, with upwards of 30,000 to 40,000 new jobs being created. I therefore think that this is a very timely inquiry by the committee and look forward to taking part in it.

As has been said, not every witness has to answer every question, and no one else is catching my eye to indicate that they want to add anything. Mr Simpson, do you want to follow up on any of that?

Yes, convener. We will be focusing on some of the detail of the individual deals in Scotland, but I do not think that that is the purpose of today’s session. That said, I believe that Dr O’Brien highlighted the issue of scrutiny of the results of the deals—in other words, the bang for our buck. In Scotland, a lot of money from the UK Government and the Scottish Government is going into the deals, but where is the scrutiny? Who is looking at the deals in Scotland—particularly the Glasgow city deal, which was the first and is now up and running—to see whether we are getting value for money and whether we are getting out of them what we are supposed to be getting out of them?

Part of the challenge in England has been the abolition of the Audit Commission, which carried out formal scrutiny of local government. The National Audit Office now has a much more direct role in scrutinising local government in England, including combined authorities and city deals, and it is doing really good forensic work on that. To that degree, it is excellent, but the hiatus period and the change and turmoil that were experienced from 2010 onwards meant that things probably fell between the cracks.

The process of deal making seems quite opaque and secret however you look at it, and the very nature of such deals makes it quite difficult to get information on how things are going. That is certainly what we have found in carrying out our research. We know that the Government has carried out a stocktake, but getting access to that information has been quite challenging for researchers.

Mr Simpson was asking about financial impacts, but there are huge equality impacts arising from how the money is being spent. The deals were created partly to address community issues, but almost all of them contain only vague references to social impacts, and I can find no detail about who will benefit and who has been involved at the various stages. The Glasgow deal is now fully formed, but our organisation has not been part of that work and I am not aware of any community groups that have been involved either. That lack of transparency is an issue for us, because we cannot evaluate the impacts of the deal and who will or will not benefit from it.

We welcome the Equality and Human Rights Commission’s project to engage with local authorities and partners, but it seems as though someone has just thought of doing that sort of thing. The deals have been in process for a few years now, and we would like to know more about what has happened in them. We understand that the process is quite secret in the early stages, but that information should now be released. It would be good to know whether equality impact assessments have been done and how the money will be spent in relation to public sector equality duties.

That was helpful. I will take Professor Maclennan next and then open the discussion up to our other witnesses.

I will make just a couple of comments about the evolution of the deals. A long time ago, I spent about 10 years on the board of the Glasgow regeneration alliance, and a deal was always conducted in private between the city, Government agencies and so on. There is nothing different about the city deal with regard to the flow of major resources.

After local government regions were scrapped in Scotland, the capacity for local authorities to make major investment decisions on infrastructure did not exist. With regard to the issue of metrics and how we might go forward, I think that there is now a more acute understanding of the effect of infrastructure on growth and productivity and its importance to economic development than has been in the mindset of Scottish city policy makers for about 15 or 20 years. There are pros as well as cons to this, although the cons might be quite big, and it is important that we look at the context in which the deals have evolved, which is the absence of major thinking about infrastructure on a metropolitan scale.

On the question of who is watching these things, part of the point of the deals was to give local authorities skin in the game and to ensure that their money was put in at the front end. Therefore, each local authority ought to be looking at where progress is being made. The Glasgow economic commission is unusual in the UK, because we—I have to watch what hat I am wearing when I say this—are there to see how the deal is progressing. We are scrutinising how it is going.

In addition, it is fine to look at each individual deal but we also need to look at what they are all adding up to as a set of changes to the Scottish city system. I think that that has been missing in the debate and, indeed, in policy thinking in Scotland. In my view, no one is addressing or monitoring that issue, and I do not think that we have got to grips with what the deals all mean at a Scotland level. I also agree with the point about the need for scrutiny by the community, which in my view has been near absent in all of the deals.

I reinforce Lesley Warren’s point about the need for scrutiny of equalities in the deals, and I highlight a similar absence of environmental assessment. Before I retired and took on this voluntary post with Transform Scotland, I worked for City of Edinburgh Council and the then Lothian Regional Council in transport for more years than I care to remember. In the latter part of that period, it was the norm to carry out not only environmental and equalities assessments but financial and various other assessments on any given project. I would therefore assume that to be the norm in each of the city deals, but we do not seem to have a reflection of their collective impacts on equalities or the environment. It might be that the sum total of project A and project B in any individual deal is not A plus B—it might be A plus B plus C. That sort of scrutiny appears to be missing even though, notionally, one would expect the impact assessments to come through on the individual projects that form part of each deal.

There is no doubt that the governance arrangements that have emerged have focused on robustness and adequate scrutiny, but the focus has been on partnership working in the deals and on facilitating such working among local authorities. No one is looking outward, and there has been very little opportunity for external stakeholders such as small businesses to contribute.

There are assurance frameworks, gateway reviews and a whole raft of terminology to describe the world of city region deals. However, despite the commitment that has been made by the Scottish and UK Governments, there is very little detail at a Scotland level and no dashboard approach to tell us where we are with the projects. For example, there is a good website that gives information on the 20-plus projects in the Glasgow city region deal, but the scrutiny of those projects is on Glasgow City Council’s website. That might seem an obscure point to make but, if communities and business owners were trying to get information on the deals and the scrutiny of the deals so that they could scrutinise the proposals, they would expect all of that information to be in one accessible place.

Does Graham Simpson want to follow up on any of that?

There was so much there, convener. It is fascinating.

Professor Maclennan said that none of the deals has identified the infrastructure that is required. I am sorry to focus on the Glasgow deal—it is the most advanced deal in Scotland—but one of the criticisms of it is that a whole load of money was thrown at it and that what was required was not identified. It was not actually a deal, but more a case of, “Here’s the money—off you go and spend it”. Council officers in the various authorities salivated at the pot of cash, took projects that they had not been able to deliver for decades, dusted them off, popped them into the deal and off they went. Is that a fair criticism?

I said that I thought—

I am sorry, but I am going to ask a helpful question. I will come back to you in a second.

You were involved in the Glasgow deal and my history is as a regional MSP for the Glasgow region. Graham Simpson made a good point, and he knows the specific case that I am about to raise as a case study example.

When I was a regional MSP for Glasgow, the Cathkin relief road completion was suggested as one of the projects. There was massive local opposition to the project, because it was thought that it would not necessarily mitigate some of the travel issues—public transport was the big issue in that area, rather than the completion of that road link. The eventual cost was £18.6 million, yet a Scottish transport appraisal guidance report from as recently as 2007 had put the cost of building that road at £3 million.

The community thought that the road was hugely expensive, undesirable, unwanted and not value for money, but that was one of the first Glasgow city deal projects. It got no community buy-in from the very earliest stages. That road exists now and is open, so the issue is Mr Simpson’s point and how we learn from such experiences. City and region deals are being rolled out around the country, so rather than me lambasting Glasgow city region for that specific ill-considered road, how can we learn lessons from that to ensure that it does not happen again?

I am sorry, Mr Simpson. I saw that as my opportunity to put some of that on the record.

I reinforce some of the points that Peter O’Brien made earlier about the importance of having good monitoring systems in place. What I said was that, in the assessments that were made, I thought that transport investments came up as top of the list on city deals around the whole of the UK in terms of cost benefit analysis and prioritisation. That relates to the methodology whereby consultants and experts are able to give a big number for a transport project—usually it is the save value of travel time—that they cannot do for other projects. Therefore, there is a bias towards doing things in transport.

We have an inheritance in which, at the city and city region level, there is not the capacity to do the modelling or to understand it. In other words, there is a reliance on external advisers and consultants to tell us what the answer is. Those advisers do their job, but every place gets pretty much the same answer, which is not the right answer with regard to the infrastructure needs of businesses and innovation areas in cities. My point was that it was analytically weak from the get-go.

11:45  

I do more work in Vancouver and Sydney than I do in Glasgow—it depends who pays for the research funds these days. I have just been involved in developing the city strategy for the Sydney metropolitan area. Sydney is a good demonstration of how to do a major investment strategy for a metropolitan area, because of its capacity, as a city region, to do the modelling, to have the debate and to involve communities—and, in this case, the committee for Sydney, which is all about business—in the process.

We can learn from the experiences that we have had, but we can also learn from other places that do it much smarter than we do. We do not put in enough thought or resource. We are trying to do all this at a point when, for the past 20 years, the people who do that work within local authorities have been retiring early. There was hardly anyone left who could do this work when it came up. When the £1 billion arrived in Glasgow, there would not have been that many people who knew what to do with it.

That was obvious.

I will leave that one hanging there, Professor Maclennan.

I am not sure that I can go back to Glasgow now.

You might be referring to people like me.

I pick up the point about the way in which the Glasgow deal seems to have come together and suggest that the pendulum has swung the other way in the more recent deals. The transport components of the most recent deal, in Edinburgh, form quite a small part of the funding of that deal so far. I am not arguing the point about the split between transport, housing and the other projects that form part of that deal. Off the top of my head, I can think of two individual projects. Although one of them accounts for six times the amount of spending of the other one, I have some difficulty in seeing how it relates to the general thrust of the council’s policies. It involves spending £120 million to grade separate Sheriffhall roundabout, compared with £20 million that will largely be spent on studies into sustainable transport in west Edinburgh.

In the context of the local transport strategies of the councils that are part of that deal, it seems strange to me that Sheriffhall roundabout is the big megaproject. Where has that come from? That is part of the difficulty. It has been touched on by the other witnesses, but it is also part of our evidence. If we look at the strategic priorities of the partners involved, how on earth are such decisions reached?

The aim of city region deals is to boost regional competitiveness. The question is whether they are on track to deliver that growth, and the truth is that we do not know. We can hide behind phrases such as, “It’s too early to tell”—by the way, it is too early to tell—but, stepping back from that, reviews that were conducted in England by the National Audit Office highlighted major problems and deficiencies in the methodology and approach.

I will cover a few of those problems, the first of which is difficulties in discounting displacement. If Edinburgh grows massively as a result of the city region deal, is that at the expense of Glasgow, Stirling or Inverness? Is it additional? Secondly, there is the lack of capacity and expertise to monitor, appraise and evaluate the programmes. That relates to Duncan Maclennan’s point. Lastly, there is the issue of different deals using different methodologies, which means that, at the end of the day, we cannot step back and say, “Because of X money, we delivered Y jobs.” In this case, jobs are being measured and implemented in quite different ways.

It will prove a challenge for the Scottish Government and the United Kingdom Government to make quite grand claims about city region deals. Some quite inflated claims have been made, which indicates the deal-making nature of the city region deals. Local authorities are trying to lever more from central Government but, from an outsider’s perspective, all that that does is to heighten expectation that the deals will have a transformative impact.

I want to pick up on modelling in the UK context. We did research on local areas that suggested that it was very difficult for them to prove that city deals would generate additional economic growth and jobs. The Office for Budget Responsibility’s model had almost factored in what it thought was the way in which the UK economy was going to grow and that city deals were about displacement, not additional growth. Local areas came up against a central UK Government response, which was, “The model says this and you are advocating that, which we are not quite convinced will work.”

That has been part of the challenge even for places such as Greater Manchester, which is seen as the poster child for city region working in the UK. Convincing the Treasury, the OBR and others that additional growth can be generated at the local level, above and beyond what the national forecaster says, has been part of the issue in England, and that might be the case in Scotland as well.

That is interesting. Do you want to come back on that, Mr Simpson?

I would love to. I could ask questions all day, but it is important that other members have a chance to ask some.

I will bring you back in later.

We are at the beginning of our inquiry. The fact that the deals run for quite a long time means that governance is very important. As I understand them, the English deals had a degree of governance reform in them. It was almost as if the Government was saying, “Here are some additional funds and here are some additional powers.”

In recent years in Scotland, we have had regional spatial planning, and local government has received fiscal powers, has had very embedded frameworks for equalities, environmental and economic assessments, and has had governance and transparency arrangements and all the rest of it. It seems surprising that we would attempt to do regional economic development through a process as opaque as this deal making, particularly when the displacement effects that have been intimated—my colleague Jenny Gilruth might say more on this—appear to be a risk in the Edinburgh city deal.

I represent Lothian, so perhaps I will be criticised for saying this, but Edinburgh does not really need the kind of growth that is envisaged, whereas post-industrial areas such as Fife desperately do. I do not want to see thousands more commuters pulling into Edinburgh every day. That would present massive problems for Edinburgh, and if we build new roundabouts that is precisely what will happen.

I suppose that my question is whether we should be taking the deals very much further or whether we should strengthen existing local government governance arrangements and local authorities’ capacity to work together. Should we strengthen local authorities’ existing powers over money and planning to do precisely what city region deals want to do in policy terms, but in a way that is more transparent, up front, consultative and sustainable, over the types of timescales that have been talked about?

I am not sure whether I agree with you on that. A fundamental problem for growing metropolitan areas is that the consequences of economic growth, whether they are shortages of transport infrastructure in the metropolitan system or shortages of affordable housing, have remained in those metropolitan areas, whereas the tax revenues that have accrued from the growth have gone somewhere else. Some of them may have come here, but most have gone to Westminster. They have not gone to local authorities. Therefore, local authorities are reliant on national or federal Governments having coherent reallocation programmes for public investment in housing. It would be really difficult to say that the UK Government has had such a programme in the past 10 or 15 years.

The problem that we deal with in managing metropolitan regions effectively is one of acute vertical fiscal imbalance in what we are asking them to do. In the absence of greater tax resource powers or assignment of tax revenues to metropolitan areas, we need a way of transferring resource back. Transferring it back through a Government structure such as a functioning city region, rather than to individual local authorities, makes good sense, given the nature of labour markets and housing markets. The city region is a reasonable entity, but we have to look at environmental and social factors as well as economic factors.

There are governance issues. The Scottish Government confronts the issue of how it deals with city regions and the areas outside them because, if it neglects other areas, the approach will not be very effective. There is also the real difficulty in Scotland that we have intruded the geography of the city regions into a geography that has health boards, regional infrastructure hubs and other quango boundaries, and none of those match. Tidying up the governance structure in quite simple ways would help to bring together those things and give the Scottish Government a clearer focus on how all those things come together at one scale.

I wonder whether we have never quite resolved the issues that arose out of the last reorganisation of local government. At that time, there was a regional layer, which would take on many of the projects that we see featuring in the city deals, such as bypasses, railway stations and railway reopenings. Those projects were carried out by regional councils. Obviously, we now have the Scottish Government and local councils. I am not saying that there is an argument for introducing yet another layer of local government—perish the thought—but there seems to be a gap somewhere between the local council level and the Scottish Government, which Duncan Maclennan was perhaps getting at. I do not know how to resolve that. It seems that a lot of joint boards, joint committees and partnerships are being set up that have very little democratic accountability because the appointments are made by local authorities and the Government. People are not directly elected. Fundamentally, the issue, which the committee has probably rehearsed quite well already, is about quangos.

There is a middle ground to be achieved involving city region deals, which represent significant capital investment, the existing function of local government to support economic growth, and the regional and national bodies that support local and national growth. Things can be quite complicated and duplicative, and we are not standing back and asking how we can make Scotland a more competitive place.

Despite the plethora of strategies, the deals are probably more about cities than city regions. Where is the consequent impact on local economies? I have big issues with what will change for Ayrshire, Lanarkshire or the post-industrial places within city deal areas. There is a good argument about agglomeration economics and making cities great, but Scotland is a community of towns. There are 479 towns here. What about our towns and our regeneration efforts in them? We should not lose sight of the fact that we spend more than £2 billion a year on our enterprise and skills network and that local government already has a key role to play through the business gateway and other functions in supporting business.

That is very helpful.

Mr Wightman made a very important point about the governance of initiatives. That issue has come up in our research. Members can think about that in the context of England, which is a very centralised country. There are big questions about how England is governed and the rest of England’s relationship with London, for example. Questions about city deals have arisen in that context. From the UK Government’s perspective, governance was part of the quid pro quo. A group of local authorities would get particular investment if it agreed to set up combined authorities. Even now, we have metropolitan mayors. Today, the seven metropolitan mayors in England are meeting for the first time. That gives us a sense of where things might potentially be heading.

There is a particular set of challenges in England. I know Yorkshire very well from doing work there. In such counties, it is very problematic to try to agree the next stage of city deals through devolution deals and metropolitan mayors. We would argue that city deals are seen not only as economic development instruments but as governance reforms, too. That has been quite clear in England.

12:00  

I have two points, one of which goes back to governance and the point that the approach sits slightly awkwardly between Government and quangos and the like. I have always been surprised that, in the Parliament, where we have regional list members, there is not an active regional-scale role for those members, which might well relate to overseeing city deals. It might make sense to have a democratic presence in that context.

Secondly, it is correct that Scotland is in some sense a country of towns as much as it is one of cities. The national spatial planning framework, which has had a coach and horses ridden through it by the city deals, has very much been written from the perspective of the Scotland of towns—I think that cities are mentioned on page 64. That framework has an accurate feel for how Scotland is as a place.

I have always railed against the notion that we should treat cities, towns and rural areas as if they are cuts rather than seeing them as connected, because they are connected and supportive of each other. If city deals go forward without coherent town deals across most of Scotland, and not just for the towns that have been missed out by the classification of the city regions such as those in North Ayrshire, we will be missing an important trick in terms of looking at ways to take forward investment projects in some of the smaller towns.

I want to pick up on that point about governance. From our perspective, it feels as if there is a disconnect between the city deals and what is happening at national and local level to address equality issues. For example, we have the race equality framework, which sets out how racism, including institutional racism, should be tackled in policy making. That should apply across all public bodies. The public sector equality duties place strict requirements on local authorities in relation to reporting and what they should consider as evidence and involvement. However, none of those higher-level drives is being fed into how the deals operate. It was mentioned that there has been no engagement with communities, but we would go further than that and say that we know of communities that have tried to approach their local city deal groups and have just come up against a brick wall.

That is helpful.

Does Andy Wightman want to follow up on any of that?

I will leave it there just now.

Okay. That leads us nicely to Jenny Gilruth’s line of questioning.

Going back to Barry McCulloch’s point that the deals were originally more about the cities than the city regions, I represent a couple of the towns that have been talked about. Professor Maclennan states in his written submission that the multiple local authority arrangements

“are compelled by a focus in City Deals to target investments and policies to reflect, as far as possible, functional geographic areas, rather than be bound by administrative areas.”

In the Fife context, the decision has been to cut North East Fife and take it into the Tay cities deal, with the rest of Fife lumped in with Edinburgh. I believe that that is to the detriment of my constituency, which takes in two areas of high unemployment and child poverty levels: Glenrothes and Leven.

In his written submission, Barry McCulloch states:

“If Inverness grows as a result of investment from the City Deal, for example, how will this benefit firms and citizens in Fort William?”

From my perspective as a constituency MSP, I feel that the Edinburgh city deal has been a great boon for the city but has been to the detriment of my constituents in Glenrothes and Leven. I cannot point to a single local project that my constituency has benefited from.

Is there a tension between the aspirations of the UK Government, with its focus on growth, and the Scottish Government’s contrasting ambitions on inclusive growth? To me, inclusive growth is also about equity, which was originally meant to be part of the consideration in the deals. It seems to me that my constituency has fallen through the cracks between two city deals and has been missed out. Do the panel members have any views on that?

I suspect that they might.

I should admit that I also work at the University of St Andrews, so I go through Jenny Gilruth’s constituency quite often.

Lucky man.

Fife is a good example of an important level of government that has been split by different city deals, so I take that point on board. However, if, as Barry McCulloch says, the objective is competitiveness, we need to deal with the metropolitan region. That happens around the world for major metropolitan areas, because the metropolitan region is where the labour market flows go and it is where thought has to be given to some of the big environmental issues as well as issues such as housing. Therefore, I defend the notion of city regions, but we have to be careful about how that is grounded. If there are exceptional areas that lie between two regions, we cannot just draw a line; we have to think about how we deal with that.

The issue gets slightly more complicated in the case of Scotland. We have been talking about cities, but if we were having this discussion in the context of Australia or Canada, only two of the Scottish cities would be classed as such: only the core metropolitan areas of Glasgow and Edinburgh are the terrain of agglomeration economies, growth drivers and the large scale. That is not to say that we should disregard the rest, but we have to think about them differently, because the growth strategy for the Perth and Tayside proposition or the proposition in Aberdeen will be different in terms of global connectivity and the way in which those places connect to the economy.

At the Scotland level, we are not being very direct. When I hear people talk about agglomeration economies in Perth and Stirling, I think, “Good luck—if you can find any, let me know.” I have seen no evidence of them, and I do not think that people will find any. That said, we need to consider the geographic structure of our big towns in Scotland. It is important to think about how we deal with Stirling but also how we deal with Falkirk or Paisley—although I should say that we are already dealing with Paisley. We need to be a bit more subtle about how we make the arguments, and we should not see all the city regions as the same.

The point about inclusive growth and the impact of the projects in Fife goes back to the point that the initial city deals were designed not to deliver inclusive growth but to raise gross value added per capita. However, there is capacity to remake them. After all, city deals are a relatively small part of overall capital investment. There is a case for realigning them in the context of spending within those areas.

There is definitely a tension between growth as traditionally conceived—in gross domestic product and GVA terms, as Duncan Maclennan mentioned and as the question illustrated—and inclusive growth. I have heard many people talk about retrofitting city region deals to try to make them more inclusive. It is disappointing that that has to happen. The aspect of inclusive growth that I would focus on is the regional cohesion argument, which is about moving away from focusing purely on cities as a policy instrument to start to talk about our towns and rural areas and what they need.

Research that the FSB published in February showed that the most enterprising places in Scotland are not the ones that we thought they would be; they are Newtonmore and Ullapool and other small rural towns that have a strong history of entrepreneurship. That has not been captured in conventional discussions about economic growth. We are missing the opportunity to do much more for the hinterlands. To do that, we need to focus on digital infrastructure and specifically mobile phone infrastructure, which is the game changer.

The beauty of city region deals is that they bring together the Scottish Government, the UK Government and local authorities. In a lot of ways, they represent a unique settlement that allows us to get over some of the disputes about reserved and devolved powers. According to Ofcom, there is access to 4G in only 12 per cent of Scotland’s landmass, so many business owners are still operating with very poor 2G. We need to increase the amount of people who can access 4G, because that is where transformation lies and where we can get productivity and growth.

I agree with the point in Lesley Warren’s submission about the lack of communication with communities. From my experience, it does not seem that the local communities that I represent were involved at all in any consultation.

That links in with Chris Day’s submission, the final page of which says:

“The Deals should provide significant opportunities to investment in sustainable transport. However, without a commitment to include sustainable transport or for to have proper regard to national objectives for carbon emissions reduction, there are no mechanisms to ensure that sustainable infrastructure is prioritised.”

You might be aware of the Levenmouth rail link campaign in my constituency, and the opportunities—in jobs, for example—that the link offers in connecting towns with cities; indeed, Professor Maclennan alluded to such opportunities. As far as rail links are concerned, the area that I represent is completely cut off. Might we be able to revisit the opportunities for smaller communities in towns such as those that I represent? I think that it was Barry McCulloch who alluded to smaller communities being disproportionately disadvantaged in respect of unemployment statistics and child poverty, for example.

On the point about Leven, I think that what happened was quite strange.

It was staggering.

I know that the Scottish Government has now committed to doing initial work on the matter. A lot of analysis has to be carried out on the returns from that potential investment, but one would have thought that, as a partner in the deal, Fife Council would be hammering on the door. Earlier, someone called this a deal-making process; I can think of a couple of other projects in Fife that might have gone into the deal to make it more sustainable. Members would expect us, as a sustainable transport organisation, to say that the project should be made more sustainable, and that has not happened.

I retired in September 2016. I should immediately make it clear that I was not involved in preparing the Edinburgh city region deal. However, I was in the organisation that was, so I had some slight and informal insight into what was happening and my observation was that the process was quite opaque not just to the outside world, but to some of the people whom we would have expected to be involved in the decision-making process.

Finally, I reinforce my earlier comment that if we look at the city deal’s outcomes—in other words, at what got put on the ground after the initial “Bang!”—the decision seems quite strange.

I see no reason why communities should not be involved, and I see no barriers to their involvement. Obviously, it is not necessarily appropriate to have certain types of involvement or consultation in some of the high-level negotiations but, given where we are at the moment, I see no reason for that not to be the case now. The constituent members of most of the city deals are public bodies, which have to comply with the public sector equality duties, but we have seen no transparent narrative with regard to what even individual bodies have done. For example, the local authorities’ own public sector duty reports do not show exactly how communities have been involved or the engagement that they have had. We would expect reports on those things to be part of their current legal duties, never mind the bigger deals.

We feel that this is very much a two-edged sword. With the money that is behind the deals, there is real potential to address the equality issues that we are all aware of and the underrepresentation of certain groups in areas. However, without transparency, positive action and community involvement, we could see a regression. Just last week, we saw in the press that the Edinburgh city deal was going to remain the status quo, which obviously could further entrench disparities and disadvantages.

Some of the city deals in England seem quite dated now, given how much changed in the UK with Brexit on 23 June last year. The UK Government has talked about an industrial strategy, and many city regions and places in England are now thinking about their role in such a strategy and the whole concept of value, whether that be simply economic value, which is what drove the city deals; financial value—in other words, the return on investment in infrastructure; or social and environmental value. However, what about the places that really have been left behind and the consequences of that situation and what happened in the referendum last year? As a result, some of the city deals seem quite dated to me.

There is a tension with long-running programmes lasting 25 or 30 years. In England, the context continually changes from the regional level to the city region level to the local level and then back again. One suspects that that will continue, and it has bedevilled economic development in England and probably across the UK. There are a number of tensions, but as I have said, the English city deals feel quite dated, because people are now asking about the industrial strategy and the role of the state in these kinds of issues.

12:15  

That is a really important point. There is a misunderstanding that city region deals are somehow set in stone and that the £1.1 billion for Glasgow has been spent, but that is not the case. Funding is given in five-year increments, projects that have been promised must go through a thorough gateway review and projects that do not stand up and do not deliver any additional impact will not go through.

That fluidity creates opportunities. I predict that local authorities will be looking afresh at city region deals in the light of changing political administrations and considering what their longer-term commitments should be. In some ways, city region deals are becoming the default way of developing the economy, and that will suck up a lot of resource, both in human terms and capital infrastructure spend. It is important that we maximise that spend, whether through procurement and ensuring that smaller businesses win as many contracts as possible or through targeting spend at more disadvantaged areas.

If you look over a long period—say, 20 to 30 years—or even go back to the 1970s, you will see that we have spent a huge amount on urban regeneration in Scotland and that we actually did it quite well at times. However, we have been much better at thinking about how we change neighbourhoods than about how we change broader metropolitan economies. In other words, we have dealt better with some of the housing issues than with economic development issues.

The important thing with city deals was that they threw the focus on GVA growth into the policy debate, but it would be wrong to ignore the wider environmental and social issues. Members have stressed the importance of inclusive growth. Most people have signed up to it, but unfortunately nobody has been able to tell me what is meant by it. If cities and groups are to be able to react in this discussion, it behoves the Scottish Government and the city regions to provide clarity about their definition of inclusive growth. You can have lots of versions of it, many of which will be very good, but you have to be clear about what it means if you are going to discuss how you are going to connect the infrastructure investment projects to the social outcomes that Jenny Gilruth has asked about.

There is a lack of clarity in the Scottish Government’s strategy. It is sending the right message, but it needs to articulate what it actually means and how more local entities, whether they be city regions, local authorities or towns, can react to it. That is a real problem.

I will move on, because of limitations of time. Kenneth Gibson has a couple of supplementaries.

On the definition of inclusive growth, the shorthand version is that it means that every community benefits from overall growth in the economy. My concern is the same as Jenny Gilruth’s. I represent a constituency in North Ayrshire, and in Ayrshire the per capita income is 32 per cent lower than the Scottish average. There is a real concern that we are being left behind and almost a bewilderment at the size of the Edinburgh city deal, given that in the Edinburgh area there are already housing shortages and the economy is overheating, relative to other parts of Scotland.

There is also a concern that towns in North Ayrshire, Fife and elsewhere will be, in effect, dormitory towns, to which people move because housing is cheaper and from where they drive, cycle or take the train or bus to work, which of course will put bigger demands on our infrastructure.

I know that we have touched on this already, but how do we ensure that some areas do not miss out? Should there be an equalisation with regard to growth deals? Should we look at the issue of areas such as Ayrshire falling further behind the rest of Scotland and the UK and ensure that additional funding goes into those areas to help them to catch up on GVA with places such as Glasgow and Edinburgh?

The shared objective that all areas should gain from growth in a nation such as Scotland is unexceptionable. However, how that is applied to a single specific set of programmes is more difficult. If the ethos about Scotland’s economic future is, in part, about the competitiveness of the major cities, which can do certain things that other bits of the country cannot do, the question of whether that has to be shared through every project or through the tax revenues that come from growth in a particular place is a tricky one. I would apply the less restrictive criterion that, when you undertake a major investment project for growth reasons, you try to ensure that as many benefits as possible accrue locally. If you cannot do that, you have to rely on the tax system to redistribute.

I have read North Ayrshire Council’s submissions and done some work with it in the past. It is a good example of a council that is trying to think about how to take a set of towns forward in a way that involves a set of town deals, which I referred to earlier. Equally, in the Fife setting, you could have a set of deals that tackle some of the infrastructure restriction issues that relate to some of the growing areas and that disadvantage others.

As a necessary complement to the city deals approach, we have to give much greater prominence to what happens in town, as well as city, strategies if we are going to have fair outcomes, growth and inclusion around Scotland. That might be an odd thing for an urban economist to say but, given the way that Scotland functions, it is really important that we think about that.

I have two points to make in response to that.

There is some interesting work happening on the notion of foundational infrastructure by people such as Karel Williams of the University of Manchester. I mentioned industrial strategy and there is a report being published today by the industrial strategy commission of the universities of Sheffield and Manchester that says that every place should have a basic minimum level of infrastructure. It says that economists are now beginning to get their heads around that and see that it is important, which is quite interesting.

There is a big question in the UK, particularly in England, about how to capture things such as land value uplift in places that are more market driven and where the economy is more buoyant, and to use that to reinvest back into infrastructure elsewhere. That is highly difficult and problematic, but we have to get our heads around that. For instance, we have not done enough in London to capture the land value uplift from property and land that has been used to invest in crossrail to then reinvest elsewhere. We also need to address the question of land value, tax and redistribution.

In the light of that question, city region deals are unquestionably the new game in town. We have three operational city region deals that have levered significant investment, there are several in the pipeline and we have two operational growth deals that are looking for external investment.

It is only natural that local authorities, being tight on finance, will go where the money is, but there is a wider point about building resilient local economies outside of that. The approach is city-centric and my fear is that businesses and citizens outside the city region sphere will miss out, unless we focus on maintaining existing infrastructure, spending and recruiting locally, building up local economies and insulating them from the external shocks that we know will happen. It is all taking place at a time when the economy is in a difficult state and business confidence is subdued, so it is really important that we maximise the economic impact from not just local authorities, but all levels of government.

There is a real question whether infrastructure investment should go into areas that are doing well to make them grow even more or into areas that are falling further behind to allow them to catch up. Obviously, I would support the latter route.

My question, which is for Professor Maclennan, is on gross value added. With regard to the 12 city deals that you have looked at, only one of which is in Scotland, I find the difference in new money—so to speak—per capita quite astonishing. Glasgow is the second highest of the 12 that you have looked at, and its figure of £556 per capita looks really impressive. However, the list ranges from that to a woeful £3 per head in the north-east of England, Sunderland and the black country. Dr O’Brien might want to comment on this, too, but what is the reason for such colossal differentials in the deals that you have looked at?

Peter O’Brien probably knows more about the English setting than I do, but when we compared the English deals with the situation in Scotland, we found the reason to be the bespoke nature of the deal. There was never any intention to have equality of per capita expenditure from place to place; it was all about the story that was told to Westminster and the funding bid that went with it. Indeed, the fact that there was no attempt to achieve equality is why I think using city deals as the basis for devolution in England is doomed from the outset. It is not going to serve that purpose in any fashion. In short, there is no rationale for the per capita expenditure differences that I have seen.

On the point about using infrastructure to make gains, I was recently doing some work for the Prime Minister’s office in Australia. The Australians have an interesting view about our city deals; they find them relatively small and unambitious. They can afford to have slightly bigger deals; for example, the city deal in Sydney is about creating a third Sydney around a new international airport. They are on a different scale with regard to what they think this is all about.

The Australians also commented that they found the approach to the deals really odd. One used land, planning powers and infrastructure, but there seemed to be no coherent commitment to extracting development gain from the process to pay for the infrastructure. I think that that is true. When you look across the Scottish city deals, there has been no real thinking about the extent to which they, rather than taxpayers, can pay for the infrastructure, and I think that it would be well worth looking at that in the Scottish context. To repeat, though, I know of no rationale for the variations in expenditure.

We have nothing other than the graph that we produced on transport infrastructure in Cardiff, Cambridge, Manchester and Preston, the information for which we found it very difficult to get. However, with regard to Sunderland and the black country, there was a sense that the UK Government wanted to conclude deals quickly and that money had been committed elsewhere. The funding that Sunderland got was for preparatory work for the advanced manufacturing park; those involved in the deal tried to be ambitious with tax increment financing, but they did not get anywhere with the Treasury. As we have said in our submission, that has led to this real disparity, and there are areas such as Sunderland, Stoke and Staffordshire and the black country that really need investment in their local economies. Of course, it also leads to a kind of opaqueness and a sense of what some might call unfairness in the system.

I will bring in Alexander Stewart in a moment, but I have a couple of questions that we will ask again in forthcoming evidence sessions and which we therefore need to cover today. Our understanding is that future funding for city deals is conditional on specific outcomes being met; however, it is also a guarantee of long-term funding. It raises the question of what happens if those outcomes are not met. Are the local authorities involved in the city region deals making alternative arrangements for the long-term sustainability of the projects that have been started? The term “retrofit” has already been mentioned, but is that code for pulling the plug on one scheme and popping it into another? It would be helpful to get some information and views on that.

Moreover, I am not quite clear about the outcomes that have to be met. We have already had some discussion about how one might define inclusive growth. Is GVA a relevant index when looking at outcomes? Should there be better thinking on how we monitor outcomes? Some general information on that would help us, as we will be asking witnesses in future meetings the same questions.

12:30  

On the first question about the role of local authorities or groupings of city regions in ensuring that the investment is available to deliver on particular projects, I would point out that with the deals running for 25 to 30 years there are, in effect, staged payments from Government for meeting certain conditions and criteria. You would not take 25 to 30 years to build, say, a metro system, or at least one would hope not; the timescale would be much shorter. However, the issue for a group of local authorities is to securitise that income, borrow against it and deliver the investment over 10 or—hopefully—five years.

The question, then, is what would happen if the group of local authorities that borrowed the money up front for investment did not meet certain conditions. That is part of the reason why some local authorities in England have been quite nervous about signing up to successor city deals or what are called devolution deals. They are not quite sure whether they can meet those financial requirements.

Does anyone have any comments that might be relevant to the situation in Scotland?

Your question is almost impossible to answer, convener, because of the lack of transparency. I am waiting for the work from Audit Scotland and the Accounts Commission to provide greater scrutiny and allow us to come to an informed judgment, but at the moment, saying whether or not the projects are on track to deliver growth would be a relative stab in the dark.

In Glasgow, there has been a lot of discussion about trying to get indicators to suggest how progress is being made, and some progress has been made on that. When the commission in Glasgow was set up, its role was to scrutinise the projects that were there instead of saying what should be there, although a more active debate is now taking place about whether the commission should be saying, “The indicators are already showing that this or that is problematic, so maybe we should think about something else.”

I do not want to comment further on that, because that would get me into my commission remit, but I think that those are fair points to make. Some progress has been made, but there needs to be more. I think at a personal and professional level that the process needs to be much more transparent and much more in the public domain.

Thank you. That was helpful.

I thank the panel for what has been a very interesting discussion. We have touched on the frustrations and tensions that are emerging across the piece, and as someone who represents Mid Scotland and Fife, I have been looking at my region, which has affluent areas such as Perth and Kinross and Stirling, and other areas such as Clackmannan and Fife. There are real differences across the region that I look after, and various deals are being drawn up by the local authorities.

With regard to the issue of engagement, which we have touched on, local authorities have been the mainstay of—or have had a massive impact on—this process. Academia, too, has played its part, as have communities and business, although apparently to a lesser extent. However, the business community has told us that there has been poor or no engagement and poor or no consultation and there is little or no knowledge of what is happening. We have heard from previous discussions and some of the submissions that we have received about business champions being part of the process, and I would like to expand our discussion to cover that issue.

If we are to have the economic growth and investment that have been talked about, the business community will have to be pioneering and sector leading, but I have real concerns that that is not the case in this matter. We might be told about good engagement with an organisation or business in some areas, but that has not happened with the small businesses that make up the mainframe in most of our towns and cities and which generate employment, economic development and potential for the future.

I have some real concerns about that situation, so I would like the panel to think about what should be happening and what we are trying to achieve through the direction that we are going in. However, I believe that the small business sector is already missing out in the process.

Does the panel have any reflections on that? I suspect that Barry McCulloch might have.

I share Mr Stewart’s concerns, but the city region deals are here to stay, as we have committed to provide funding for at least a decade for two of the operational sets of deals and for 20 years for the Glasgow city region deal. Therefore, the conversation that we need to have now is about how we can make the process work more effectively, and we have to set aside concerns that that should have been tackled three years ago.

One approach is to reflect on developments outside the city region deals. We have a culture of open and transparent decision making, whether through community empowerment or participatory budgeting. Only this week, we had an announcement from the Scottish Government and COSLA about participatory budgeting and we have the business improvement districts. We are quite good at that in Scotland, but it seems that city region deals are insulated from those developments, and I struggle to understand why.

As Mr Stewart mentioned, there is an opportunity for improvement through having independent small business champions—that idea is an important part of our contribution to the debate. It is important to have an independent private sector voice involved in the deals. There is Opportunity North East in the Aberdeen city region, but it represents a particular segment of the economy—albeit an important one—and there are questions to be asked about how representative its views are of smaller local businesses. The small business champions would have the important role not only of scrutinising but of exploring opportunities and ensuring that key spending decisions are made with small business in mind. For example, that could mean ensuring that the public contracts Scotland website is used for procurement for public contracts, as has been done with the Glasgow deal. It is also about promoting opportunities, because there are significant supply chain opportunities for the private sector to exploit.

We need to be much more systematic in our approach to engaging businesses, because the engagement is piecemeal at the moment. We might run an event in one area or a survey might be developed in Moray, for example, to encourage businesses to take part. However, we need a much more holistic approach so that the local community overall—the private sector, the third sector and citizens—can have an open debate about what should be taken forward. The missing component is that transparent and open discussion about what is best for the economy of, for example, Moray or Stirling and Clackmannanshire, what the money should be spent on and how we take that forward.

I wonder whether we can widen the discussion a bit, because I am conscious that we are not really talking about people and communities that much when we talk about inclusive growth. One reason why we were keen for Lesley Warren to come along was to get her views on sustainable growth and what an equalities agenda looks like. Barry McCulloch rightly talks about a small business champion in relation to future engagement and how city deals and city region deals should develop. Should there be an equalities champion? Is there a need for a much stronger engagement strategy in how city region deals do their business if retrofitting is going to happen to some of the deals? Are there lessons to be learned? Can Lesley Warren give us some pointers on how we can take that forward in a much more inclusive way for all our communities?

We would agree with most of what Barry McCulloch said. We already have much of the legislation that is needed. As was said, we already have the Community Empowerment (Scotland) Act 2015 and there are already duties on the public sector, which I have mentioned several times. We generally have a consultation environment when it comes to public spending and local decision making, but we are just not seeing that in city region deals. Therefore, the issue is perhaps not necessarily about introducing new schemes or ideas or having one person whose job it is. For example, the minister wrote to the Equality and Human Rights Commission and encouraged every city region deal to work with the SHRC because it is important to embed certain issues.

Our concern is that we just do not know where communities fit in the process. There has been no transparency about what decisions have been made, especially for some of the newer deals. It is not clear to us where communities would fit into that. We want to ensure that, when communities are included, it is not just tokenistic but meaningful and that their views have an impact.

That is helpful. How can that be improved on? For example, what would inclusive growth mean to CRER? My constituency, Maryhill and Springburn, is very close to Glasgow city centre and is one of the most deprived constituencies in Scotland. I would want to know how the city region deal would benefit Possilpark or Royston. I would want to know that, instead of just making the strong economy in some parts of the city even stronger, the deal would get people economically active and bring added value to the economy of Glasgow. Despite my constituency sitting at the heart of a city region deal, I have issues about what inclusive growth would look like. What would inclusive growth mean to you? Those are questions about city region deals that we will have to tease out with the political leadership.

For CRER, employment is a key part of most of the deals, and we are looking at addressing issues of social exclusion in many areas. Scotland wide, members of the black and ethnic minority community are outperforming their white counterparts in education, yet they are less likely to be in employment. When they are in employment, we tend to find clustering in lower ranks and lower pay brackets. When the money is spent, we would expect there to be measures to tackle things like that. It is something that we have known about for a long time. The statistics are not new—they have existed for a decade or more.

We also know that there is massive underrepresentation of BME applicants among candidates for apprenticeships, and the situation is the same for disabled people. Again, we would expect the deals to be a vehicle through which to address those issues.

It is a shame that there is not enough information about the city region deals. If we had documentation about what they are currently doing, we could be more involved on the issue of positive actions and so on. I do not feel comfortable saying, “This is what we should be doing,” because I do not know what is currently happening.

You have identified many areas of major concern. In trying to progress the deals, we need to ensure that there is community engagement and that deprivation is talked about. It should not just be blue-sky thinking, whereby the deals are seen as the panacea that will sort out everything in the community for the next couple of decades. That will not happen unless everybody is involved in the deals and makes a contribution. With some of the deals, there are real winners and losers. As we continue to investigate the deals, it will be important to see how that progresses.

Where should we look next to see what is being achieved in communities and organisations? If we do not get it right, organisations will wither on the vine and communities will go backwards instead of going forwards.

Lesley Warren gave good examples of the kind of things that she would like to be monitored. What outcomes of the deals would the other witnesses like to be monitored?

I spent a long time working on housing issues in Glasgow and I was on the board of Scottish Homes for 10 years. I spent a lot of time—two days a week, as it happened—working with communities in Glasgow and the west of Scotland more generally, mainly on housing issues. The energy that communities put into those issues really shifted those places. I have absolutely no doubt that, if communities had not been encouraged or enabled to take forward change, there would still be whole neighbourhoods, particularly in Glasgow, that would have issues with drugs and crime.

I am thinking about how this would play out in the other cities in which I work. At the very least, there would be a communities forum to discuss the issues recurrently. There would also be an annual communities conference to talk about progress as perceived by the community. In my academic capacity, I will write to the chairman of the Glasgow economic commission to suggest that it might be a rather good idea for us to do that in the context of Glasgow, and maybe the others will take it up. Community engagement of that kind is absolutely essential if these projects are to be taken forward and, as somebody said earlier, supported by the community.

That is very helpful. Dr O’Brien, do you want to add anything?

12:45  

My brief final point on the matter is that, in England, a lot of the deals were capital heavy and we cannot divorce what was happening to local government revenue spending at the time, which was impacting heavily on local communities. Local authorities were having to cut back on services in local communities while, at the same time, those capital-intensive deals were coming in, which meant that there was an imbalance. The split between capital and revenue is important for the deals, as revenue tends to be much more important to local communities.

Are there any additional comments before we move on?

In terms of what happens next, it is important that the city region deal teams get out and talk to not only businesses but communities proactively and that those discussions involve not only the delivery of a project such as the improvements on Sauchiehall Street but people’s views on how things are and how they can be improved, because moves elsewhere to do that have been proven to work. The approach needs to involve a commitment to something that is a bit more open and transparent. However, to make those judgments, we have to know what we know and, at the moment, we do not.

There is good practice in Scotland performs, and I see no reason why city region deals should not aspire to a dashboard approach, so that people can, at a glance, see their overall performance.

That question rather blindsided me, so my response might not be entirely coherent. I will be looking into areas such as transport poverty. You will probably have seen the work that was done by Sustrans on that issue—I think that it was published last week. Some of the issues have already been alluded to by members of the committee.

For example, Edinburgh is a prosperous and overheated economy, and the question is, how do people who live in the less well-off communities surrounding it get access to it? By “access”, I mean physical access, which involves issues around how easy it is to get to places via public transport as opposed to by car. For instance, it is easy for a well-off person who lives in East Lothian to get in their car and whizz around the bypass to their nice, well-paid job in Edinburgh Park. Issues such as modal split should also be considered.

I do not have a preset package of answers for you on that issue, but I can get back to you if you want.

We are just prodding away and teasing some of this out. Your answer is helpful. Would Lesley Warren like to comment?

I welcome the questions about what can be done to improve things in relation to what we have just been talking about.

I am nervous about pointing to one magic bullet. With regard to the comment about community forums, we have been working hard to ensure that equalities are at the forefront of everyone’s minds and that people do not just leave everything to be dealt with by an equalities adviser. We are talking about huge sums of money and people who are in high-ranking professions. Everyone should be thinking about equalities as part of their day-to-day work. We would like to see that being documented, in the first instance, as well as there being individual engagement and work with communities and wider Scotland initiatives.

You would welcome a form of communities conference, but you think that equalities should be a mainstream, everyday concern—that is the key point that you are making.

Yes.

I am still trying to work out what this is all about and what we are trying to do. I see some logic in what the UK Government was attempting to do in England, but I do not see the logic in Scotland. My understanding is that the Scottish Government has made no formal announcement that there will be a programme of city region deals. We have had a cities alliance and a focus on city regions in the third national planning framework, but none of that is matched up with city region deals.

The announcement that Glasgow would get a big lump of cash was made—by Danny Alexander, I think—in July 2014 and, within hours, the Scottish Government matched that sum. That was in the lead-up to the Scottish independence referendum. Is it not the case that what has been happening in Scotland has been done substantially on the back of a highly politicised process in 2014, when the story was that the fact that the UK Government was giving all that money to Glasgow showed that Scotland did not need to be independent and the Scottish Government then said that it would match that sum for related reasons? That was all quite hasty and took place in a politicised environment, and we are now dealing with the aftermath of that.

There is also the fact that we do not want to be left out through not having city region deals. However, from a Scottish policy point of view, I am still not clear what a city region deal is, because they do not seem to have any rational or logical underpinning. I am not saying that the English city deals have a rational or logical underpinning, but we can see what the UK Government was trying to do, and I do not see that in the Scottish context. Are we just playing catch-up in relation to decisions that were made, understandably, in a highly politicised environment in 2014?

Now, there is a question. Professor Maclennan, do you want to start?

To quote the Kinks, in the field of urban policy, we are dedicated followers of fashion—there is no doubt about that—and there were distinctive political circumstances at the time. That said, however, the Scottish cities alliance was a good idea. I was and am supportive of the idea of having a forum that brings together the major chunks of the geographical population of Scotland to discuss issues and the connections between them. That interconnection has been missing in the English context. However, the Scottish cities alliance was running on about £6 million or £7 million a year, so it was about catalytic ideas rather than investment in infrastructure.

To flip the argument over, and recognising that the larger Scottish cities and the others are partly competitive with cities in England in terms of outputs and markets, could we argue that enough attention was being paid to strategic infrastructure investment in the Scottish city regions? In 2014, I would have been fairly confident in saying that it was not. Therefore, we needed something to deal with the city regions.

Back when, in cities policy in Scotland, there were cities development grants, those were allocated initially—before the programme was downsized—on the basis of a strategic city region statement. People have forgotten about that, and I remember it only because I was responsible for leading the review of Scotland’s cities. There was a notion that city regions ought to have a strategic vision and work together, which prevailed for about 18 months and then disappeared for various political reasons.

It is not all simply about fashion and politics. There was a genuine case for having a more coherent view on how infrastructure could support growth, and we then needed the specific model that would translate into that growth. I would defend that as a reasonable expectation. However, as the process has gone on, it has not met my initial expectation that it would be a good way to have an infrastructure strategy that connects the economy, society and the environment. That has not evolved. We could do better, but we should not lose sight of the need for a coherent infrastructure strategy at the regional level.

Because Andy Wightman might not have the chance to come back in again, I will give him the opportunity to make any additional reflections or to ask any further questions at this point, which can be mopped up by the various witnesses. Time is almost upon us.

I am happy, convener.

It was helpful of you to ask, as a final question, “What is it actually all about?” It would be useful to get some clarity on the intended purpose of the deals, but it might also be helpful to hear what the witnesses think they should be all about. Can we have some final comments on city region deals?

There is a degree of comfort in hearing that I am not the only one who is trying to make sense of them. The FSB has been trying to do that for about 18 to 24 months.

The position that we have arrived at is that the deals are a payment-by-results model, whereby the Scottish and UK Governments provide funding for the projects that they want to deliver. However, that has not really brought together the UK and Scottish Governments in a programme of works to upgrade infrastructure or deliver a skilled workforce. The intentions are sound, but it has not quite worked out that way. We have spent a lot of time on building up the apparatus and structure. We are servicing the governance arrangements but we are forgetting the ultimate purpose of the city region deal, which is jobs and growth. We can argue about what that growth should look like, but that should be the focus.

City regions are here to stay, so we must consider what practical approaches will make the model work. I recommend that the Parliament not only undertake greater and regular scrutiny to make sure that the city deals are delivering but that it look at how to make it easier to do business across city regions. That is about not deregulation but better regulation. For example, at the moment, a window cleaner operating in the Glasgow city region needs eight window cleaning licences. There is an opportunity to put the process online and to streamline and simplify it so that a person has to apply only to one place in order to be able to clean windows throughout the Glasgow city region. We must consider the connection between municipal boundaries and economic geographies and have a serious look at what we can do to make it easier and more efficient to do business.

We want city region deals to be a real opportunity. As has been mentioned a few times, there is generally a positive attitude towards equalities in politics and across local government, but city region deals are an opportunity for people to put their money where their mouth is and say what they will do to tackle the issue.

I have two final points. First, we should not underestimate the question of policy transfer and how the models will be transferred—typically by consultants—across local and national boundaries. There is a process to consider. The National Assembly of Wales is conducting its own review into city deals, and it would be useful to look at its report, which is imminent.

Secondly, the UK Minister for Cities, Greg Clark, did his PhD on incentive payment systems. The civil servants in the UK Government that we interviewed told us that deal making is in his DNA, so I would not underestimate that part of the story either.

I have not got much more to say. One should apply a certain element of perspective—the deals will not make or break cities, because wider global forces are work. When I moved to Edinburgh, in 1979, it was a sleepy provincial city. Through a combination of local government action and Edinburgh’s genetic makeup, it has become the city that it is today. Liverpool is a classic example of global forces overwhelming anything that can be done at the local level.

We do not have any easy answers. I remember being involved in ring-fenced funding in the early part of the previous decade, when the Scottish Executive had projects such as the public transport fund. Some of the issues have been going through another cycle, and a city region deal is another pot of money for things that local authorities will scramble to get. Sometimes, those things do not necessarily reflect what local authorities would, in a neutral environment, choose to do, but that is what is available and, when they are hard pressed, that is what they will go for.

What the Government tries—or has tried—to do in terms of economic development and the geography of Scotland is a tough ask. It is a tougher ask now, in many respects, than it was, because where we put our money and how that pays off, although it meets social objectives, must contribute to the tax base in a way that is more constrained now than it was in the past. The deals that we make in the future will depend on how places thrive—and the Parliament’s resources will be increasingly determined by that.

Territorial management—that is a good French phrase; although the French do not do it spectacularly well, the phrase is the right one—involves thinking about how the larger cities, the city regions and the smaller cities with their connections to the rural areas are all important. The Scottish voice has influenced city region deals, and inclusive growth is now a subject of discussion in England. That was not the case before the issue arose in the Scottish city region deal context.

City region deals are a relatively small part of the capital flow, but we need to think about how they fit into the broader strategic investment that the Government and, indeed, local authorities and groups of authorities want to make. There is the capacity to do something really interesting in the Scottish context and to build on the model rather than scrap it.

I thank all the witnesses for giving evidence today—it has been really helpful. As Mr Wightman alluded, we always knew that we would be grappling and struggling a little bit to get our heads around some of the city region deal stuff. Today was our first evidence-taking session, and it has set the scene well. We are very appreciative of that.

If there is any additional information that you want to pass on—there may be something that you wish you had mentioned or you may have an idea that you think we should raise with the political leadership when it comes to give evidence—do not hesitate to get in contact or send an email to the clerking team.

13:00 Meeting continued in private until 13:16.