ABERDEEN CITY REGION DEAL:

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1 ABERDEEN CITY REGION DEAL: Powering Tomorrow s World #ABZdeal

2 Introduction The Aberdeen City Region Deal provides what is possibly the best opportunity in the UK to build further growth into an already successful regional economy - the success of which has a significant positive impact on UK PLC balance of payments and tax revenues. The region s expertise in oil and gas has been exported globally for many decades and UK companies and nationals are now firmly embedded in key positions of influence in the global energy sector. Indeed, the expertise developed in the North Sea by subsea engineering contractors has allowed the UK to hold around 40% of a global market of 20bn, further evidence of the ability of UK energy sector companies to excel in export markets. The industry and the region are now at a threshold whilst fossil fuels will be 60% to 70% of the global energy mix for at least another 30 years, there is a significant risk that the industry s presence in Aberdeen and Aberdeenshire could fragment prematurely and prejudice the extent to which remaining reserves in the North Sea are recovered. This is nationally significant as the energy sector recently paid 2.2 billion in UK Corporation Tax. The Aberdeen City Region Deal draws together the challenges, the solutions and the asks being made - a combination of finance, enabling regulation and empowerment - and identifies the considerable benefits arising. The City Region Deal will have far reaching impacts, not just on the economy, but on regional competitiveness, connectivity, infrastructure, housing, employment and lifestyle, all of which are key elements in attracting and retaining the people we will continue to need to power and support the energy sector. The bid identifies the quality and power of the linkages with partner organisations in the private, educational and public sectors as well as describing what is already being done to help address the challenges - work which the City Region Deal will significantly accelerate and simultaneously help anchor the success critical elements of the energy know how and supply chains in the North east for the benefit of the region, its people and the wider UK. The ambition shown in this bid reflects the aspirations the partners have for the area - we are in global markets where only world class is good enough. The City Region Deal will ensure we deliver that. This is a successful region which plays a significant role in contributing to the financial well-being of Scotland, the UK and globally. By even greater collaboration across industry and all layers of government, we can protect the competiveness of the industry and help to Power Tomorrow s World. 2 3

3 Aberdeen City Region Deal Key Themes The Aberdeen City Region Deal, backed by Aberdeen City and Aberdeenshire councils, is a shared vision to ensure the area remains an economic powerhouse and a strong contributor to UK Plc. Chancellor George Osborne announced the formal opening of negotiations as part of his Budget announcement in March 2015, and detailed discussions on the proposals are now underway between council officials and senior officials at both the UK and Scottish governments and senior regional representatives. Innovation and Internationalisation The City Region s world-class research base can be enhanced through collaborative work between industry, academia and three tiers of government on a radical new economic development strategy focusing on innovation, skills and internationalisation. Innovation: Our vision is to expand our existing culture of innovation, research and development built to a large extent on the success of the North Sea oil and gas industry over the past 50 years. We would seek to develop an Innovation Hub which will: Establish a world-leading centre of excellence supporting innovation in the energy sector. Support the development of a combined research centre for biopharmaceuticals. Explore key areas for diversification and establish a Centre in Food Security. Establish a Big Data Internet Hub and Innovation Centre in Aberdeen. Bid for a share of DECC s 20m innovation budget to support renewables projects. Establish a University Enterprise Zone to help develop small to medium businesses. Internationalisation: The north-east has a long and successful history of exporting goods, expertise and talent around the world, and through the City Region Deal, we want to maximise the returns. Aberdeen Harbour Board is planning a major expansion of the port into Nigg Bay at a cost of around 410m which will require upgrades to the surrounding road infrastructure in order to ensure its commercial viability and maximise the value of surrounding employment land. We want to set up a joint, highly-focused trade and investment team from all levels of government to help businesses in the north-east improve their global reach. Housing and Connectivity The two councils are seeking to establish an Infrastructure Delivery Programme and an associated 20-year investment fund to deliver the critical requirements of the City Region Deal. Our Infrastructure Programme contains the following key strands: Housing: The rapidly increasing population has put acute pressure on the housing market. The City Region population is expected to grow by 54,000 by 2025, with the addition of 40,000 new jobs. The deal seeks a ringfenced loan guarantee facility from Infrastructure UK to help address the area s housing needs. Transport Connectivity: Our transport infrastructure has not kept up with the pace of growth of business activity and population over the last 40 years. The deal seeks to enable transformational investment in infrastructure, recognising the pressures and constraints being placed on air, road and rail links. Digital Connectivity: Major investment in digital infrastructure is required in the Aberdeen area to improve connectivity which can enable an acceleration in economic growth, stimulate innovation and retain and create employment in the region. City Centre Regeneration: A thriving urban core plays an important part in a successful city, and Aberdeen must compete with other world energy capitals. The City Council has agreed a Masterplan framework for the city centre that requires support to enable associated infrastructure requirements. 4 5

4 Aberdeen City Region Deal 6 Aberdeen City and Shire - At a Glance 4 Aberdeen 12,293 MILLION Mackay Consultants estimate that economic output in Aberdeen City and Shire from October 2013 to September 2014 was approximately 12,293million Between 2004 and 2014, Aberdeen City and Shire population increased by 46,980 (21%) from 442,510 in 2004 to 489,490 in Most of that change was accounted for by migration, as the net change due to births and deaths was small. is ranked 4th among 64 cities in terms of the number of patents per 100,000 of the population 79% LEISURE ENERGY BUSINESS ENGINEERING TECHNOLOGY CULTURE MEDICINE FARMING MEDIACONSTRUCTION The EMPLOYMENT RATE for Aberdeen City & Shire in 2013 was 79% which is above the Scottish average of 70.7% 2, % 14% The BUSINESS BIRTH RATE for Aberdeen City and Shire in 2013 was 2,840 new enterprises a 14% increase from ,242 GVA per Head %1.4 In 2013, the City & Shire had a GVA per head of 36,242. This was the second highest figure in the UK, after Inner London. This is an increase of 1.4% 4YEARS In 2014, Aberdeen topped the tables for 4 years in a row as Scotland s leader in innovation. HGF Intellectual Property Specialist, 2015 OIL & GAS INDUSTRY paid 2.2 in corporate taxes on production in BILLION A Shared Vision for Our Future Aberdeen City Region believes and invests in Higher Education and delivers a world-class learning experience for students. This underpins our reputation for learning that is exported across the globe through the international energy industry. It clearly demonstrates our commitment to supporting the on-going growth and prosperity of the Aberdeen City Region for the benefit of Scotland and the UK. Professor Sir Ian Diamond, Principal of the University of Aberdeen Aberdeen City Region s success is down to our entrepreneurial spirit and global outlook. Investing in the region will underpin global company development from SMEs up. Professor Gary McEwan, Elevator UK Every penny invested in Aberdeen will make a direct return to the UK Treasury through increased oil revenues. There s no safer place to invest. Martin Gilbert (September 2014), Chief Executive, Aberdeen Asset Management (FTSE 100) At what is undoubtedly a difficult time for the North Sea oil and gas industry, investment from Aberdeen City Region Deal is essential to anchor the international supply chain in the north-east and maximise the long-term economic recovery and value to the UK. Significant infrastructure development is critical to our role as the hub of the UK s North Sea activities and ensuring Aberdeen and Scotland retains its position as a major, global offshore oil industry centre of technology and excellence. Alongside this, the North East of Scotland must unlock much more potential from industries like food & drink/agriculture, life sciences and tourism to broaden the economy. Sir Ian Wood Aberdeen Airport is the gateway to Europe s energy capital, serving around 3.5 million travellers a year. It is the world s busiest commercial heliport, transporting more than 500,000 passengers in support of the North Sea oil and gas industry. As the most connected regional airport in the UK, we need the best infrastructure in and around the airport. Carol Benzie, Managing Director, Aberdeen International Airport 7

5 Partners nestrans #ABZdeal