Scottish Government

APPENDIX ONE: ABERDEEN

Introduction

A1.1 This chapter sets out a review of the Cities Growth Fund process for Aberdeen. It covers the following key themes:

• City vision;
• City Growth Fund projects;
• Fit between projects and city vision;
• Progress with city vision projects;
• Management of CGF fund;
• Project management issues;
• Impacts;
• Other benefits; and
• The Future

The City Vision

A1.2 The Aberdeen city vision is entitled 'Energising Aberdeen - Creating the conditions for Growth'. The vision was produced in early 2003 and has at its core the development of Aberdeen as a leading centre in the new economy. The vision is, in part, a response to the need for Aberdeen to capitalise on its central position in the energy industry and ensure it maintains and develops this in light of changing consumer, technological and skill demands.

A1.3 The vision is underpinned by twelve programmes of work which revolve around developing and attracting new talent, diversifying the economy and improving the city's infrastructure. In common, with the other cities Aberdeen had to develop their vision within a compressed period of time. Despite this, the key partners in Aberdeen were confident that the twelve individual themes outlined in their vision were relevant. Indeed, a recent 'sense-testing' exercise found that if the vision were to redrafted today the same 12 themes would be identified.

A1.4 The lead role in developing the vision was taken by the economic development section of Aberdeen City Council. The vision was designed to link in with a number of other strategic documents at both a national and local level. These were:

• The Scottish Executive's Building Better Cities and Cities Review;
• The Community Plan; and
• North East of Scotland Economic Forum's ( NESEF) ⁶ strategic plan.

The Aberdeen city vision was widely seen as the first document which attempted to thread the common themes in these strategies together.

A1.5 In terms of the consultation process, The Aberdeen City Alliance ( TACA) and NESEF were central to the vision's development. The vision was drafted by Aberdeen City Council's economic development department but was tested out through a series of workshops which were attended by a range of stakeholders from Aberdeen City and Shire, which covered both the public and private sector. Scottish Enterprise Grampian ( SEG) also provided links to stakeholders in the private sector through their ties with NESEF.

A1.6 At the end of the consultation process, the vision was ratified by the Cities Growth Fund board (which is a sub-committee of Aberdeen City Council with full powers of decision and spend) before being taken back to TACA for final sign off.

City Growth Fund Projects

A1.7 The twelve programmes of work selected by Aberdeen are outlined in Table A1.1 on the following page. The programmes have been organised according to investment themes. From the table it can be seen that:-

• The largest proportion of Aberdeen's CGF allocation was intended for streetscape projects, with a total of £3.5m allocated to this theme. This theme included 4 projects;
• £2.5m of the fund was originally allocated to cultural investment. This included projects such as the Castlegate Regeneration, Exploring the City and Arts and Creative industries; and
• The inward investment theme comprises one project, Energy Capital. The £1.5m allocated to this theme was intended to develop several key projects, with a particular focus on the renewable energy sector.

A1.8 The Aberdeen city vision document describes the twelve programmes of work presented in the table. Initially, somewhere in the region of 36 projects had been forwarded for funding through CGF, however these had been sifted down to the final twelve using the following criteria:

• Perceived fit with the vision and the priorities of Aberdeen City and Shire Economic Forum ( ACSEF); and
• Determining those projects which were deemed 'nice' to have and those which were clearly aligned to delivering sustainable economic growth

A1.9 The selection was described as more qualitative than quantitative by stakeholders in that decisions were made on the basis of debate and discussion on which projects would bring most benefit to the city. The spread of projects in Aberdeen was seen as a strength by the city council. Their approach allows investment to be made across the city, rather than concentrating it in 1 or 2 large projects. Unlike other cities, Aberdeen did not have a major infrastructure project waiting for development.

TABLE A1.1 Aberdeen City Growth Fund Projects and Original Budget Allocation

A1.10 The allocation of CGF to specific themes along with the capital and revenue allocations is presented in Table A1.2. This highlights that:

• Streetscape accounted for 30% of the total CGF allocation. This theme comprised projects such as Urban Realm which undertook a series of capital works programmes aimed at upgrading infrastructure in the city centre. The predominantly capital nature of the streetscape projects meant that it accounted for 49% of the original CGF allocation;
• Community participation accounted for 13% of the total CGF allocation, however represented 51% of the capital allocation. This is explained by partner funding support for the proposed building of a sports facility near to RGU playing fields. The £1.55m allocated to the Sports Development project is entirely capital related;
• Cultural investment represents just under a quarter of the total CGF allocation but accounts for the majority of the revenue allocation (61%). The cultural and artistic elements of projects such as the Castlegate regeneration and the development of arts and creative industries explain this;
• The CGF allocation for Events is entirely revenue based. This portion of the fund was intended to raise Aberdeen's profile as a host city for prominent sporting and cultural events. This means it accounts for 39% of the revenue allocation but only 5% of the overall CGF allocation; and
• 5 out the 7 themes have a mixed capital and revenue split.

TABLE A1.2 Capital and Revenue Split of Aberdeen Projects

*totals may not sum to 100% due to rounding.

Leverage

A1.11 A key objective of the original CGF funding was its ability to lever in additional funds from other public and private sector investors. The estimated leverage figures for Aberdeen are presented in Table A1.3. From the Table it can be seen that public and private leverage is roughly equal across the themes. More specifically:-

• Projects included in the cultural investment theme were the most successful in levering in additional funds with £5.963 million from the public sector and £4.147 million from the private sector. Main contributors from the public sector were Scottish Enterprise Grampian, the Heritage Lottery Fund and the Scottish Arts Council;
• Public and private sector leverage for the Community Participation theme is for sports developments; and
• The public sector leverage in the inward investment theme has primarily been through the Aberdeen Renewable Energy Group ( AREG). This strategic project has levered in public sector funds through Aberdeen's universities, the Scottish Executive and Scottish Enterprise Grampian. In addition, it has secured private sector funding from oil companies such as Shell and BP. In total private sector support amounts to £1.22 million.

TABLE A1.3 Public and Private Sector Leverage in Aberdeen

A1.12 In summary, the basket of projects selected in Aberdeen represents a broad range of interventions across the city. This can be seen from the 7 thematic categories into which they fall. The stated aim of the partners in developing the Vision was to create the conditions for growth in the city. The selected projects fit the Vision quite closely, however direct and indirect relationships to creating the conditions for growth are evident across the basket. For example, Energy Capital, with its formation of the Aberdeen Renewable Energy Group ( AREG), is an intervention aimed at ensuring Aberdeen uses its skillbase and expertise in the energy sector, maximises opportunities from the oil and gas sector and leads diversification into the renewables sector. In contrast, other projects such as Covered City, which places covered structures in parts of the city centre, can be argued to have a less direct effect on Aberdeen's growth. The aim of this project is to contribute to the Vision's objective of creating a city buzz and making Aberdeen a desirable and competitive visitor destination.

Fit between Projects and City Vision

A1.13 Using the thematic categorisation of projects, the basket of projects was assessed for 'fit' with the Aberdeen City Vision. As can be seen from Table A1.4, 3 areas of mismatch can be identified. These are:-

• Private transport infrastructure. The vision makes reference to improving this aspect of the city region. However, review of the project basket does not immediately support this. The 4 projects included in the streetscape theme appear to focus on the more peripheral aspects of infrastructure such as footways, cycleways and lighting as opposed to upgrading the city centre's road networks;
• The vision also makes reference to improving public transport infrastructure such as creating 'a ring of park and ride sites and a frequent cross city railway service providing fast, clean and regular interconnecting services'. No timescale is cited with regards to the development of this feature of the vision, there is also no evidence of any early stage progress being made towards it in the initial project set; and
• The theme of training and education runs subtly throughout the vision. References are made to potential future skill shortages and the creation of a diverse economy. That said, projects to encourage and develop the emergence of new skills do not appear to be evident in the initial project set. It could be argued that facets of the Aberdeen Renewable Energy Group ( AREG) project have a skills development aspect, but of the 12 project strands in Aberdeen there is not a clear training and education champion.

TABLE A1.4 Fit Between Projects and City Vision

A1.14 The areas of mismatch identified are based on our assessment of the vision against the project basket. Overall, the Aberdeen vision can be considered to fit closely with the projects selected to deliver the vision.

Progress with City Vision Projects

A1.15 It is widely accepted that the Cities Growth Fund projects got off to a slow start in Aberdeen. Two main reasons were put forward for this:

• The pace at which the application for funding to the Scottish Executive had to move. This meant that Aberdeen took some time to implement what were essentially 12 brand new projects; and
• The absence of a proper and efficient capital works programme.

With the establishment of a proper capital works programme the projects accelerated in Aberdeen.

A1.16 Table A1.5 shows that Aberdeen has overspent on 5 of its 7 project themes. The main explanation for this is that Aberdeen has viewed the CGF as a 5 year programme and as such, have structured their spend on projects accordingly. The appointment of the Cities Growth Fund co-ordinator led to the establishment of a capital works programme which in turn led to the acceleration of the projects across the city. Rather than artificially slow done the projects to remain within the 2003-06 budget, Aberdeen approached the Executive with a proposition to draw down extra funding against their 2006 - 08 allocation. The Executive agreed to this, which allowed Aberdeen to continue with the established pace of their programme. The result is that Aberdeen has spent £13.4m on projects in the period 03-06 against their original allocation of £11.5m. Aberdeen had drawn down against the total £22m they have been allocated over the 5 years.

A1.17 This strategy was justified particularly with regards to the revenue projects, Arts and Creative Industries and Festivals and Events. With regards to the latter it was felt it was important to spend in order to generate credibility and build Aberdeen's profile as a city capable of staging high profile events. An example given was the British Seniors golf programme. An economic impact study of this showed that it had generated £1m of revenue for the city from an initial investment of £150K.

Slippage

A1.18 With regards to slippage, the Citadel project did not happen. This was due to the owners of the building, the Salvation Army, not wanting to sell. The Citadel project has been replaced with the Castlegate project, which constitutes a £820,856 redevelopment of the area around the Citadel. (Table A1.5).

A1.19 Slippage in other projects has been due to changes in direction. For example, in the Urban Realm work CGF money had funded a study into the redevelopment of the Wellington Road Suspension Bridge. The results of this study took the project in a different direction through which it became part of a bigger programme. This is now being funded totally through the mainstream budget with partner agency support.

TABLE A1.5 Project Spend and Underspend

Management of CGF Fund

A1.20 The strategic management of the CGF fund is the responsibility of the Cities Growth Fund board. This is a sub-committee of Aberdeen City Council with delegated powers. The board are responsible for:-

• Making decisions on the re-allocation of funding between project strands within standing orders;
• Approving the introduction of new project strands and programmes of work; and
• Ensuring CGF is the most appropriate fund to support new projects being introduced in the city.

A1.21 The operational management of CGF is undertaken by the CGF co-ordinator. This co-ordinator is an employee of Aberdeen City Council and has a number of distinct responsibilities:

• Provision of regular reports to the CGF board;
• Management of the whole CGF programme on time and on budget; and
• Overseeing the12 individual programmes of work and working with the individual project managers to ensure delivery

A1.22 Each of the 12 individual projects has an allocated programme of works manager who reports into the CGF co-ordinator. The responsibility for overall progress of the CGF projects and budget lies with the CGF co-ordinator.

Project Management Issues

A1.23 Discussions with the key stakeholders in Aberdeen found no significant project management issues. Aside from the slow start in Aberdeen, the CGF programme was considered to be progressing as desired.

Scottish Executive

A1.24 Aberdeen's relationship with the Executive was described as very good. The Executive have visited Aberdeen on a number of occasions and were reported to be satisfied with the basket of projects.

A1.25 Aberdeen felt that the Executive had not been prescriptive in determining how the CGF allocation should be spent, but have been there for guidance when needed. The perception in Aberdeen was that the Executive were keen to see the majority of CGF money spent on capital projects. Aberdeen had followed this principle, and included explicit revenue elements which have been approved as part of the developed programme.

Impacts

A1.26 Several of the CGF projects were described as a catalyst for wider work. Some of the initial front end work taken on by the fund has led to changes in the thinking of the council. For example, an initial piece of work in Torry has led to several agencies taking on the regeneration of this area, with a promised £50 million commitment. The view was that this would not have happened without the initial CGF work.

A1.27 No detailed economic impact work has been carried out in Aberdeen to date. Qualitative studies have been included in the board briefings, but this has tended to be small scale and anecdotal. Scottish Enterprise Grampian ( SEG) has been pressing for an evaluation framework to be put in place and this is being discussed at present.

A1.28 Limited direct feedback has been obtained from local businesses on the impact CGF projects have had on their performance. The view was that it was still too early to quantify what the economic impact of CGF funded projects had been. Some of the higher level marketing work, such as the development of the Aberdeen 'City and Shire' branding had received a positive reaction from the private sector. The visibility of the branding in Aberdeen city centre was considered to be having an impact on citizens and tourists alike. The creation of this regional identity was hailed as a key output of the CGF work so far.

Additionality

A1.29 The view was that without CGF none of the 12 programmes of work would have happened. The money would not have been made available to fund them through the mainstream council budget. The example given was that if the council had the choice of using £150,000 to promote festivals or put towards the social work budget, the council would always elect to enhance the social work budget as this is a statutory service. For this reason, CGF was considered to have 'opened the eyes' of the council towards the possibilities this type of investment can bring. As such, they are now looking to mainstream a number of the projects after funding ends. This is possible as the scale of some projects means they will not financially over extend themselves. The fund has given the council the opportunity to innovate with to try new projects they would not have had the money to take on previously.

Other Benefits

A1.30 The range of projects that CGF had been spent on was said to have benefit in widening the thinking of politicians and policymakers in Aberdeen to the possibilities of what can be termed 'non-traditional' projects. The value and potential returns from several of the CGF projects was seen as going some way to encouraging delivery of similar type projects in future.

A1.31 Furthermore, CGF was said to have been instrumental in helping to formulate the 'next generation' of projects planned in Aberdeen. These represent a mix of projects most of which will be funded by the private sector. An example of this is a market research project undertaken at Aberdeen airport. The output of this led to the airport operator BAA taking on and developing a targeted marketing project, which has contributed to the sustained growth recently experienced at the airport. Without the CGF projects, the development of these projects may not have been as advanced.

The Future

A1.32 As Aberdeen have viewed the CGF as a 5 year fund, the spend is virtually all accounted for up to 2008. Any new programmes of work will be subject to intense scrutiny by the CGF board to ascertain whether CGF is actually the most appropriate way of delivering them. The flexibility of the fund was hailed as a feature to be retained, and Aberdeen stated they have always kept the Executive informed of their plans.

A1.33 The fund has been used as intended over the last 3 years and Aberdeen are happy with their progress. There is no doubt amongst stakeholders that the money has contributed to projects which would not have happened otherwise. This has led to a chain reaction with CGF feeding into bigger projects.

A1.34 At present there is a city wide regeneration strategy which is being developed. This will involve investment on a much bigger scale than CGF but could see the City Growth Fund play a key role in achieving the delivery of this programme. This may involve a narrowing of the current project range and some being dropped if they were deemed not to fit with wider priorities.

Good Practice

A1.35 The well developed project management structure in Aberdeen can be considered a key element of good practice. The CGF project coordinator has 12 separate programmes of work managers overseeing each of the project strands. This devolved responsibility allows the CGF project coordinator to play a more strategic role in overseeing the entire programme rather than being constrained by the day-to-day management of individual project strands. This approach has been successful in Aberdeen as it has allowed the city to build up the momentum of their programme. This is reflected in the fact that Aberdeen have drawn down funding against their 2006-08 CGF allocation.