The Scottish Government

Scotland's Cities Review

The Executive's plans for the future strategic role of Scotland's six cities within their surrounding regions were spelled out with the publication of the Building Better Cities report on January 9.

It includes a £90 million City Growth Fund and the creation of long-term City-Vision statements of how individual cities can work in partnership with other stakeholders in their geographical regions to achieve measurable improvements.

Breakdown of City Growth Fund

Aberdeen £11.5 million
Dundee £9.3 million
Edinburgh £24.2 million
Glasgow £40 million
Inverness £3.1 million
Stirling £1.9 million

The Executive intends to examine the scope for the introduction of Business Improvement Districts and Urban Regeneration Companies as a means of stimulating growth and renewal.

A special taskforce is also to be established to produce initiatives on the handling of vacant and derelict land. An additional £20 million is to be made available for land reclamation in Glasgow, Dundee and North Lanarkshire.

From the Building Better Cities report:

ABERDEEN

Aberdeen has cemented its presence as the oil capital of Europe. The recent history of the city-region is one of success, with high employment, high earnings and excellent "quality of life ".

Pockets of deprivation are isolated, but deep. Aberdeen 's success has also been Scotland's gain through multiplier effects for both incomes and employment, with GDP over 30%above the Scottish average and above full employment. Meanwhile, pressures on the fish-processing and food sectors will pose significant challenges for the wider city-region.

Today's success may constrain success in the future. High house prices and constraints on the availability of business locations and land, traffic congestion, and skill shortages in a near full employment economy each act as a disincentive to locate and grow businesses in Aberdeen.

While Aberdeen starts from a high base, its growth in recent years has lagged the rest of Scotland. Its success is narrowly based on oil and gas, which in itself is a cyclical industry.

Aberdeen has long recognised this and is well placed to achieve the necessary diversification response - with a strong research base, a strong service sector in terms of software and business advice, and a higher business start-rate than the average.

Short-term priorities

• Rectifying skill shortages.
• Building a sense of place (a City "buzz ") through strategic cultural investment
• Improved transport infrastructure and availability of high quality business locations
• Internationalisation of oil and gas companies and diversification into new industries

Longer-term directions

In the longer term, Aberdeen will need to adapt to the gradual maturing of the UK oil and gas sector through the internationalisation of existing oil and gas firms, thereby building on the knowledge and expertise gained and in diversification into new industries.

DUNDEE

Recent improvement in Dundee's economic performance and external image have been based on revitalisation of the city centre, on the back of long-term strategic investment in the cultural, retail and public realms, and the growing clusters of biotechnology, medical science and multimedia software companies.

Dundee has a large student population, bringing a vibrancy and diversity to the city. Nevertheless, a high proportion of manufacturing industries have experienced difficult transitions to new technologies and markets. This has left a legacy of high unemployment and deep social deprivation, declining population and vacant land.

The development of biotechnology and software clusters at the high skill end and call centre developments are providing new opportunities for the local economy. Business links with further and higher education are strong. These are promising developments on which to build. The city's business birth rate is well below the average but has scope to improve within the newly developing environment. Improvements to the city-centre retail facilities and the excellent cultural and tourism related initiatives are also redefining Dundee.

Maintaining this momentum of growth to offset decline elsewhere can be supported through effective public sector support, which should focus on new industries and on the legacy of economic change. Dundee's educational and health experience is marked.

Dundee, uniquely among Scottish cities, loses a disproportionate number of its young people in their 20s: they take with them their skills, energy and spending power. Alone amongst the cities, Dundee is projected to have both declining population and household numbers.

Short-term priorities

• Championing the success in biotechnology and games software, together with other new industries
• Building on improvements in the city centre and in city "image" to make Dundee a place where people aim to live and work
• Managing economic transition, and its effects on population change and housing markets
• Enhancing the skills and capabilities in deprived communities in Dundee represents both a challenge and an economic opportunity

Longer-term directions

Dundee is, of course, midway between two major cities experiencing problems of success - Aberdeen and Edinburgh. Both might provide opportunities e.g. a competitive location in the wider Central Belt economy.

EDINBURGH

Edinburgh's major economic success story is borne on the back of growth in financial, business services, public administration and cultural/entertainment sectors - the right economic mix at the right time.

It now enjoys high incomes, high employment, limited deprivation and exceptional "quality of life ". Of the four larger cities it has the lowest crime and the highest "neighbourhood satisfaction".

Residents of Edinburgh are twice as likely to have a degree, and half as likely to have no qualifications, than the average for Scotland. Its problems are primarily those of success.

Edinburgh is coming up against constraints to future growth: tight labour market, significant house price inflation, high commercial rentals, traffic congestion, pressures on the green belt. Growth management is not a temporary challenge - both population and the number of households are projected to increase in the future.

Edinburgh will need to manage its transport system for business, its use of land, ensuring new sites for both housing and business, and managing the spread of business actively outwards, with all that entails for transport, planning and housing. The pressures for growth risk damage to quality of life, one of the mainsprings of Edinburgh as a business and residential location.

Such pressures might also make responding to new challenges more difficult; high house prices stifle job mobility when it is needed most. Any frustrated growth cannot automatically be assumed to transfer to other Scottish city-regions - the skilled/experienced labour market and supplier base that has developed in Edinburgh over a period of years is in many areas just not available elsewhere on a similar scale. Edinburgh's success may bring opportunities for other areas, but this process will require policy management.

Short-term priorities

• Improving transport infrastructure and traffic management
• Rectifying skills shortages by widening travel to work area
• Managing pressures on greenbelt land for housing and business development

Longer-term directions

Hard choices for the city lie ahead. Strategic decisions are required on how and where the current and forecast economic and household growth in the city can be accommodated.

GLASGOW

Employment growth in Glasgow has out-performed all the cities over the last five years. The significant service sector growth in the dynamic city centre, driven by commercial and retail sectors, and underpinned by extensive investment in the public realm, is more than offsetting decline in manufacturing.

But the legacy of industrial change remains large. Glasgow remains a dual city: simultaneously witnessing strong growth and acting as the centre of gravity for the West of Scotland, while dealing with the legacy of decline. Prosperity co-exists with extensive and deeply rooted areas of social exclusion, characterised by low skills and low aspirations, which are largely disconnected from growth areas in the city.

Promoting further growth, while ensuring that prosperity is widened and shared is a key challenge. Strong growth in the knowledge economy and the service sector provide the engine of growth. For this to be sustained, further improvements will be required to the links with Glasgow 's excellent research and learning institutions, its strong tourism presence and business facilities.

Under utilised people/assets co-exist with tight labour market/shortages of readily developable land. There is a large backlog of physical dereliction - 9% of the land area is either derelict or vacant.

Economic activity rates are amongst the lowest in the UK. For Glasgow to have the same rate of employment as Scotland as a whole would require over 50,000 new jobs. But over 40% of those not in work have no qualifications.

Short-term priorities

• Widening economic successes to address deep social deprivation. There are major opportunities for regeneration and reconstruction with the M74 Extension, the Housing Stock Transfer and the Schools PPP.
• Building capabilities and skills to respond to economic opportunities.
• Improving governance and partnership working.

Longer-term directions

Glasgow has, since the early 1990s, reinvented itself on its own terms, with growth in employment and investment. This will need to continue - the deeply rooted social problems in Glasgow represent both the biggest challenge in building a better Scotland, and the biggest opportunity.

INVERNESS

Inverness has experienced significant growth in recent years. Its population increased by a third over the last 30 years. Strong growth has been underpinned by its quality of life: excellent environment, good school education, and low crime.

Its prospects are now better than they have ever been. It is firmly established as the principal administrative, medical, professional, leisure and retail centre for the Highlands and wider afield - at the heart of the Highlands city-region.

Making the step from large town to the "capital " of a key city region is a key challenge. Growth has been on a small base, driven by retail, public administration and business services.

Inverness is re-invigorating its city centre with enhanced transport links within the city and beyond. It faces challenges in raising its tourist offering, up-skilling the workforce and attracting talent from elsewhere and raising its cultural offerings.

Inverness has achieved growth on the back of changing industrial structure - the boost of oil related growth has been superseded by expanding ICT, medical services etc. This reinvention of the economic base will need to continue, requiring a highly skilled and flexible workforce. The relatively shallow labour pool in the area underpins the importance of the learning sector and the need to attract talent into the Highlands as well as maintaining existing population.

Short-term priorities

• Diversifying the economic base and fostering new and growing industries, including by enhancing investment in transport connections and the availability of sites for business development
• Establishing and gaining full university status for the UHI Millennium Institute
• Building and attracting a diverse labour pool, as well as attracting visitors through the arts/cultural offering

Longer-term directions

Inverness is a new city, undergoing change and development. It is more than ever the "capital" of the Highlands city-region. The focus on the fragile western and northern fringe needs to be complemented with a focus on the success of the city area.

STIRLING

Scotland's newest city (awarded city status during the 2002 Jubilee Year) was not part of the review process, but the report is equally relevant to it and its future. Stirling is also to receive £1.9 million from the City Growth Fund.