Aberdeen City Region Deal - weekly progress update 29 January 2016

Civic leaders and the business community have welcomed an announcement that both UK and Scottish Governments have agreed the terms of a deal investing in the north-east’s future.

Aberdeen City and Aberdeenshire Councils’ efforts, in conjunction with Opportunity North East, Scottish Enterprise and other stakeholders, to secure an Aberdeen City Region Deal proved successful yesterday. (Thursday, January 28)

At a ceremony hosted at the Town House, in Aberdeen, a Heads of Terms agreement was signed by Cllr Jenny Laing – Leader of Aberdeen City Council; Cllr Martin Kitts-Hayes – Co-Leader of Aberdeenshire Council; David Mundell MP - Secretary of State for Scotland; Keith Brown MSP – Cabinet Secretary for Infrastructure, Investment and Cities; and Sir Ian Wood – Chair, Opportunity North East.

It paves the way for investment in innovation, internationalisation, digital connectivity, and infrastructure across the region.

The principal objective is to ensure the region continues to make the optimum contribution to both the Scottish and UK economies.

Having contributed significantly to economic output in recent years, the current downturn in the oil and gas industry has brought the need for diversification even more firmly into focus.

The City Region Deal will address a number of proposals from the region including a new oil and gas technology centre, supporting the industry to exploit remaining North Sea reserves and funding towards the expansion of Aberdeen harbour. The Deal also sets out how the region will diversify the biopharmaceutical and agri-food industries, diversifying the area’s economy and creating new jobs and export opportunities, as well as commitments to improve digital connectivity across the area.

All of these will play an important role in supporting and growing the economy and society of the Aberdeen City Region for the future.

In addition, the Deal will support a transport appraisal which will take a long-term strategic view of the transport implications of the investment unlocked by this deal across modes including road and rail.

A detailed proposal was submitted to government in December as part of a process of negotiation which has been ongoing since early 2015.

Both councils and Opportunity North East worked extensively with their partners in the business and academic communities, who endorsed the detailed proposals as the best way to secure the region’s economic future.

The agreement will see equal funding committed by the UK and Scottish Governments, totalling up to £250 million. 

Leader of Aberdeen City Council, Cllr Jenny Laing said: “We always felt there was a very compelling case for a City Region Deal for Aberdeen. This is a significant investment in our region and will be used to facilitate a number of key projects including the Oil and Gas Technology Centre and some significant digital improvements.

“Everyone behind the City Region Deal is committed to doing all they can to support the oil and gas sector and the wider north east economy. The deal which has been agreed addresses some of the most significant challenges faced by this region and provides a great start to unlocking its future potential.”

Co-Leader of Aberdeenshire Council, Cllr Martin Kitts-Hayes said: “We welcome the City Region Deal for Aberdeen City and Shire. Our teams have been working closely with both the UK and Scottish Governments to develop a Deal that will support the oil and gas industry in Scotland, and also explore new opportunities for diversification and building on our reputation as an innovative place to do business. The deal is a testament to the collective enthusiasm and support we have received from the public and private sectors, and academia in developing our Deal. 

“We believe that this marks the start of a huge opportunity for the Aberdeen City Region and we welcome the significant investment that will open the doors to further investment in key areas such as infrastructure and housing that is so fundamental to the region.”

Sir Ian Wood, chairman of ONE, said: “The City Region Deal is built around a medium to long term vision for the economy of North-east Scotland. Today’s agreement is a really strong signal of confidence in the future of our region from the UK and Scottish Governments, particularly in relation to the role that innovation will play in maximising the North Sea opportunity and achieving diversification and greater balance through growth in our other key industries.

“The work done by ONE, in partnership with Aberdeen City and Aberdeenshire Councils, Scottish Enterprise and the city’s two universities, has secured significant funds which we believe will be around £210m for innovation in our region, spanning our priority industry sectors and including big data and internationalisation.

“The oil and gas innovation funds will help to create an international oil and gas technology centre which will support maximising economic recovery in the UKCS and help to transition Aberdeen from an operational base to a major, international centre for offshore technology and innovation. This will anchor the supply chain here for the long term. An early solutions programme will develop new technology to increase production in the North Sea and work with SMEs will stimulate innovation, bring technology to market and expand our supply chain exports.

“The funds for the biopharmaceutical and agriculture, food and nutrition innovation centres will be the catalyst for ONE’s sector activities to help grow these industries and provide a diversified and better balanced economy.

“We strongly supported Aberdeen Harbour Board’s Nigg development, which we see as game changing for the region, and welcome the commitment for this strategic infrastructure project.

“Looking forward, this announcement is only ‘the end of the beginning’ for these projects with some major challenges ahead to translate this funding opportunity into projects of scale and impact to deliver economic growth and secure high quality employment in the medium to long term.”

A UK Government initiative, City Deals are a way to target significant investment to boost local economic growth.

Any investment needed to achieve the aims of the project will come from a wide variety of sources and will have to be secured - there is not a large pot of money available to deliver on a wish list.

The City Region Deal will have far reaching impacts, not just on the economy, but on regional competitiveness, connectivity, infrastructure, housing, employment and lifestyle.

The success of the Deal relies on collective support for a shared vision – from local and national government, the private sector, academia and the wider public.