Major study calls for tax powers to be devolved to Scotland’s biggest cities

Mark Bell

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SCOTLAND’S biggest cities need tax raising powers, immigration to be devolved, an overhaul of business rates and major investment in connectivity to succeed in the future, according to a new report.

A major academic study of the AGE cities – Aberdeen, Glasgow and Edinburgh – has found that the Covid-19 pandemic, the climate crisis and Brexit have combined to create a potentially “toxic” cocktail of change for urban Scotland. 

Scotland’s Urban AGE 2022 calls on businesses and all levels of government to collaborate to ensure these cities overcome the challenges they face in this period of rapid and profound change. 

The project – commissioned by Brodies LLP, Anderson Anderson & Brown and Aberdeen, Glasgow and Edinburgh Chambers of Commerce – is a sequel to a 2018 report and outlines what has changed (and what has not) in light of the pandemic and the accelerating net zero carbon agenda.

Professor Brian Evans, Head of Urbanism at the Glasgow School of Art and an advisor to the United Nations Economic Commission for Europe, led the research team and estimates that city inhabitants will soon outnumber rural dwellers for the first time in human history.

He said that Scotland needs the AGE city regions “at the top of their game” if it is to remain globally competitive. “Cities need to be dynamic, or they decline,” he warned.

Despite accounting for just 22% of Scotland’s land mass, these city regions house 68% of the population and account for 73% of the country’s GVA. 

However, a consequence of this centripetal position is that these cities have been hit hardest by the Covid-19 pandemic, which hollowed out shared spaces, devastated high streets and accelerated societal change. Together they lost 124 weeks of sales, more than any city in neighbouring England, due to our stricter pandemic measures.

These economic challenges have combined to create five key challenges:

City centres facing enormous transition: There is consensus around the fact that office requirements could fall by around 30% as requirement shifts from scale to smaller, but better commercial real estate. If 3-4 day in-office working weeks become the norm, the impact on footfall, the viability of businesses serving office workers, the office property market and the public transport system could be profound, especially if it is accompanied by long-term changes in shopping, entertainment and leisure.

A built environment that requires retrofitting on an industrial scale: The built environment, which is believed to contribute around 40% of the UK’s carbon footprint, is a major barrier to reaching net zero targets and retrofitting on an industrial scale is required.

An ageing population which will lead to workforce and tax revenue pressures:By 2030, a fifth of our population will be of retirement age. By 2050, that figure will surpass a quarter. This presents significant challenge around how our citizens interact with their cities, but also around the human capital required for them to function. This poses particular problems for Scotland as immigration is currently a reserved matter.

Deteriorating domestic and international connectivity: A step-change in inter-urban connectivity and infrastructure is required to undo the damage done to our air connectivity by Covid-19 and improve the speed of rail connections between our AGE cities. Without Government support, UK airports will lose around 600 routes as a result of the pandemic.

Planning and taxation systems straining with pace of change: The pace of change in all market sectors – housing, offices, manufacturing, logistics, retail, leisure, hospitality and education – presents a significant challenge to our planning service, which at present is a hollowed-out version of its former self after years of cutbacks. Scotland’s non-domestic rate scheme also lacks flexibility, which may leave it ill-equipped to deal with the rapid change being thrust upon our cities.

To ensure our AGE cities can bounce back from recent shocks to the system and thrive in the century of the city, the report’s commissioning partners have made seven recommendations to policy makers:

RECOMMENDATION ONE: Devolve meaningful tax raising and other fiscal powers to our cities to allow them to fund investment and deliver programmes that reflects local needs and opportunities.

RECOMMENDATION TWO: A major focus on increasing the residential population of our city centres to replace the critical mass lost due to technological advances and other social changes. 

RECOMMENDATION THREE: That the AGE cities form an alliance to work collectively to accelerate their journey to becoming net zero cities, mirroring the principles of the C40 cities. Retrofitting on an industrial scale will require taxation incentives.

RECOMMENDATION FOUR: That immigration policy is devolved to ensure our cities and regions have access to the workforce they need to prosper. Aligned to this, Scotland needs a Net Zero Jobs Strategy to ensure that we have the requisite skills and labour force to deliver on our climate pledges.

RECOMMENDATION FIVE: We need significant investment in growing and upskilling our planning service to embed pace, place and partnership in all it does. It needs to respond quickly to the changing environment in our AGE cities, contain the strategic planning capacity to design better places, and also seek to work in a collegiate rather than combative fashion with those wishing to invest in our cities.

RECOMMENDATION SIX: We need a new rates system fit for the century of the city. A new system should reflect changing property needs locally and incentivise new businesses to emerge and grow in our towns and cities. A new system must also recognise and account for the impact of technology on retail and the changing use of our city centre buildings.

RECOMMENDATION SEVEN: Significant and transformational investment in rail infrastructure is required to improve journey times between all three AGE cities and their extended regions. AGE city airports also urgently require route development funding to address lost connectivity.

Speaking on behalf of the three Chambers, Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce said: “The updated report considers what has changed in light of the pandemic and the accelerating net zero carbon agenda, and also the many fundamentals which have not.

“It must be used to provide the launchpad to propel Scotland forward in the century of the city. And we ask Scotland’s policy makers to urgently work together with business communities to make the necessary interventions that will shape the next chapter for our AGE cities – and it must happen at pace.”

“As agents of positive change, Chambers of Commerce and our project partners stand ready to play our part. Doing, not just talking.”

Elaine Farquharson-Black, partner and co-head of planning at Brodies, said: “The recommendations set out in the report come at a critical time for our cities and provide useful direction to encourage economic recovery at a time of unprecedented change.”

“With offices in all three of the AGE cities, Brodies is acutely aware not only of the challenges which each city faces, but also the importance of their success to the national economy. We need the AGE cities to be vibrant places for people to live, work and visit. It is now our collective responsibility to implement the recommendations of SUA2 through collaboration, investment and commitment.”  

Mark Bell, Co-founder at Partner at AAB Consulting, said: “We were delighted to be involved in the discussion leading to this report. While we don’t need to agree with everything in the report it does provide a lot of food for thought. Our focus is on what it means for the thousands of businesses we support across the three cities.”

“Our message is clear. A lot has happened since 2018 but not much has changed; we need to stop talking about what could be done and start doing it; and we need to grasp the opportunities arising in the post-pandemic world and the increased focus on the climate emergency.”

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