The Leader of Glasgow City Council has today (3 July 2014) welcomed the news that the UK Government will tomorrow announce a City Deal worth £1.13billion for the Glasgow City Region.

The City Deal will be used to fund major infrastructure projects, drive innovation and growth through the support of key sectors such as life sciences, and address challenges in the local labour market.

These projects will allow a programme of work to go ahead which will greatly add to the value of the local economy over the next twenty years.

armadillo-thumbThe UK Government will give the City Region £500million in grant funding, and is inviting the Scottish Government to match this. The local authorities involved will borrow a further £130million.

The City Deal is expected to give the City Region a permanent uplift in its GVA of £2.2billion per annum (4.4%); 15,000 construction jobs during the construction period; 28,000 permanent additional jobs once construction is complete; and will unlock £3.3billion of private sector investment.

Councillor Gordon Matheson, Leader of Glasgow City Council, said: “This is fantastic news for Glasgow and the Clyde Valley. It will help us to move to the next level in terms of economic growth for the City Region. We have been working closely together with the UK Government on this project for some time, and I am delighted to say it has borne fruit. The City Deal will bring tens of thousands of jobs, encourage growth and improve our competitiveness to bring benefits across the whole of the Clyde Valley area for the next 20 years.”

The City Deal has been developed by officers from the eight participating local authorities in the Glasgow City Region and other local partner organisations.

The local authorities in the city region have been in detailed discussions on the City Deal with the Cabinet Office for some time. Discussions with HM Treasury, the Department for Business Innovation and Skills and the Department for Work and Pensions on the detail of the schemes proposed also took place.

Professor Sir Jim McDonald, Principal of the University of Strathclyde and Chair of the Glasgow Economic Leadership Board said:“The news of Glasgow’s success in attracting the City Deal Investment comes at an ideal time in the city’s economic renaissance.  As Chairman of the Glasgow Economic Leadership Board, it has been my privilege to contribute to creating a strong partnership between Glasgow City Council, key business and industry sector leaders and the universities and colleges within the city.

“The City Deal will provide new investment capacity that will accelerate economic growth, job creation and the exploitation of our innovation capability to help make Glasgow an economic driver locally and nationally, as well as positioning us as an exemplar of a dynamic 21st city region economy on the international scene.

”Glasgow’s civic leadership, industry and business intensity, talent, and world-class research and innovation systems represent combined assets that have made us increasingly distinct. This exciting award reflects the joint ambition and vision of the public, private and academic partners that have developed in Glasgow in recent years and will build the business confidence and appetite for investment in Glasgow’s proposition.”

Stuart Patrick, chief executive of Glasgow Chamber of Commerce said: “The approval of a City Deal is fantastic news for Glasgow and the region. We would like to acknowledge the effort of Glasgow City Council and Gordon Matheson in working with neighbouring local authorities to secure this funding boost, a first in Scotland.

“This City Deal has the potential to deliver significant economic and jobs growth across the Glasgow metropolitan region. The model has a proven track record in England, boosting the economies of many of our competitor cities.

“We endorse the principal of City Deal on two counts. Firstly, it will involve investment in economic infrastructure across the local authorities that make up the real Glasgow economy bringing local authorities together to promote economic growth. Secondly, it requires firm discipline in agreeing the projects giving the local authorities a genuine incentive to choose projects that improve the economy and create jobs.”

The City Deal is coming at the right time for a major step up in the economic development of the City Region, as growth is starting to return to the UK economy. The local authorities in the region consider that they have the opportunity to exploit this timing and to capitalise on the emerging opportunities from recovery.

The announcement covered the following component parts of the City Deal agreement:

An Infrastructure Fund

Based on the proposal developed by the Clyde Valley Authorities (excluding East Dunbartonshire) for a programme of investments valued at £1.13billion, the UK Government are proposing to make up to £500million available as grant funding over the next twenty years. Important aspects of this are:

The Scottish Government will be asked to contribute to the fund also, with the request being for a matching grant of £500million over 20 years.

The participating local authorities will contribute to the fund, with their contribution being £130million.

Milestones will be negotiated with HM Treasury but for 2019 they are likely to be around programme delivery.

The participating authorities will need to agree to a phased and prioritised programme of investment, with clear impact estimates for each element.

A Commission on Economic Growth will be formed to evaluate the impact of the programme.

Funding for Labour Market Programmes

Detailed discussions were held on three areas of Labour market policy, with a view to introducing new ways of working to assist specific groups identified as suffering greater disadvantage in the labour market.

Project to assist people on Employment Support Allowance – DWP will make £4.5million available over three years as a 50% contribution towards the cost of the project. Detailed modelling is still ongoing but it is estimated that 4,000 people will be assisted, with around 1,000 moving into work.

Progression Pilot – DWP will provide support of around £300,000 towards a pilot to support new employees in the workplace. This will be part of a national pilot, and the details are still being worked out.

Youth Employment – DWP will work with the local authorities to review the way in which young people are supported by DWP and whilst there are no immediate funding implications, this should have positive impacts further down the line.

Detailed work will be undertaken during July to create a City Deal document, and more information on other parts of the deal will be announced shortly.

The eight local authorities collaborate on strategic issues through the Clyde Valley Community Planning Partnership, which has as its vision a city region ideally positioned to meet the challenges of the next 20 years, becoming more outward-looking and better connected to European and global markets.

The characteristics of the City Region would include a strong growing core in Glasgow, but able to exploit growth opportunities across the region, reducing economic inequality, and a highly skilled and entrepreneurial workforce able to engage fully with the labour market.