Aberdeen will receive £250m in funding from the government after bidding for support in a “city deal”, prime minister David Cameroon has announced while visiting the city.
The deal coincides with an announcement from the Scottish government that it is investing £254m to fund key infrastructure projects in the region.
The city deal for Aberdeen will fund an energy innovation centre and an expansion of Aberdeen harbour, enabling the city to compete for oil and gas decommissioning work.
The money will also be used to support the oil and gas industry to exploit remaining North Sea reserves, and sets out a plan to diversify the biopharmaceutical and agri-food industries in the area.
The agreement will be the second city deal in Scotland, following the establishment of a £1.13bn Glasgow and Clyde Valley Infrastructure Fund in 2014.
In England, six regions have won funding from central government by agreeing devolution plans as part of their bids to government. However, in Aberdeen the funding is not connected to any commitment to devolve, or to elect a “metro mayor”.
The six city-region deals are now in place for Greater Manchester, Sheffield, the north east and Tees Valley, and now Birmingham and the west midlands and the Liverpool City Region.
"The investment announced today is an opportunity that Aberdeen’s construction industry will grab with both hands, and the infrastructure it delivers has the potential to be an engine of long-term growth for the region’s economy as a whole."
Andy Outram, Turner & Townsend
Commenting on the funding, communities secretary Greg Clark said: “This package of support will help prepare the oil and gas industries for the future, given their crucial importance both to north-east Scotland and the country as a whole.
“But with plans including the expansion of the city’s harbour, greater digital connectivity and support for growing pharmaceutical and agri-food industries, it will also help other businesses locate to the area and offer job opportunities for years to come.”
The announcements were welcomed by the industry with Sarah Speirs, RICS Scotland director, saying: “While the oil and gas industry may have lessened the full impact of the economic recession on Aberdeen when compared to the rest of the UK, the recent downturn in energy prices has the potential to negatively impact upon the city on a grand scale.
“The economic impact of the Aberdeen City Deal funding could be amplified by bringing forward key infrastructure projects, such as enhanced road and rail networks between Aberdeen, the north-east corridor, Inverness and the central belt; and connectivity and capacity improvements to Aberdeen airport.
“A significant proportion of the funding should also be directed toward infrastructure necessities of housing supply, digital connectivity, renewable energy and carbon capture. By steering funding toward the renewable energy industry, Aberdeen can continue to be the energy powerhouse of Scotland, and beyond.
“In our manifesto, Shaping Scotland’s Housing Future, we call on government to encourage the remaining three cities in Scotland – Dundee, Stirling and Perth – that have not yet bid for funding of this nature to do so, with their bids having housing and high-economic impact infrastructure projects at the forefront of their design.”
Andy Outram, director at consultant Turner & Townsend, told Construction Manager: “Aberdeen has been hit hard by the tumbling oil price, so such a substantial funding injection is very welcome. While the oil and gas sector was the first to be affected by job cuts and a reduction in capital spend, the impact of the falling oil price has rippled out across Aberdeen’s wider construction market.
“The investment announced today is an opportunity that Aberdeen’s construction industry will grab with both hands, and the infrastructure it delivers has the potential to be an engine of long-term growth for the region’s economy as a whole.”
Alongside the city deal, the Scottish government announced £254m of funding for Aberdeen and Aberdeenshire that will be invested in major infrastructure projects. The majority of funding will be spent on rail improvements, with £200m allocated to improving rail links between Aberdeen and the central belt and upgrading the rail line in the Montrose basin.
Of the remaining money, £24m will be spent on trunk roads, including the A90/A937 south junction at Laurencekirk; £10m on the extension of digital infrastructure; and £20m on infrastructure funding to unlock housing sites.
Comments are closed.