£250m City Deal for Aberdeen to be signed today

The North East of Scotland is to benefit from over £500 million of funding to improve its housing and infrastructure.

The signing of a UK City Deal for Aberdeen and Aberdeenshire will see £250m invested into the region equally between the UK and Scottish governments. And the Scottish Government has separately promised another £254m for housing, roads and railways.

The agreement will be Scotland’s second UK City Deal, following Glasgow’s arrangement agreed in 2014, and will also aim to support the struggling oil industry.

The City Deal will address a number of proposals from the region including a new energy innovation centre, supporting the industry to exploit remaining North Sea reserves, as well towards the expansion of Aberdeen harbour, enabling the city to compete for decommissioning work. The City 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.

Scottish Secretary David Mundell will sign the deal on behalf of the UK government today. Then later, the prime minister David Cameron will visit Aberdeen to meet local employers and workers, as well as senior executives from the oil and gas industry, to hear about the challenges facing the area.

First minister Nicola Sturgeon had written to Mr Cameron “urgently” calling for a deal following job losses in the industry.

David Mundell said: “Oil and gas is a crucial sector, not just for the North East of Scotland but for the whole of the UK. I know it’s a very tough time for people who work in the industry and their families, and I am determined that the UK Government will do what it can to support them.

“We need action which will help in the short, medium and long terms – building a bridge to the future of the North Sea; helping the UK’s oil and gas industry to export its world-class expertise around the globe; and encouraging diversification of the economy to create new opportunities in other sectors too.

“This UK City Deal will help deliver that and demonstrates our commitment to this very important part of Britain’s economy. We have seen in Glasgow the extra jobs and growth that this kind of deal can bring, and I want to see the same achieved in and around Aberdeen.

I also very much welcome that the Scottish Government has decided to match our funding and work together with us on securing a better future for the North East of Scotland.”

Cities minister Keith Brown, who will sign the deal on behalf of the Scottish Government, said: “Aberdeen and the north east remain central to driving future growth and prosperity in Scotland, and that is why the Scottish Government has agreed that on top of our existing support for the region we will invest £125m in a City Deal that delivers significant benefits for the region and Scotland as a whole.

“Delivery of the City Deal will reaffirm the north east’s global reputation in oil and gas, and pave the way for diversifying the region’s economy.

“Investment in digital and transport connectivity, the expansion of Aberdeen’s harbour and the establishment of a new innovation hub will drive future growth and prosperity, and help to cement Aberdeen as one of the world’s leading cities for investment and business.”

The specific Scottish Government funding will see an initial £200m to improve journey times and increase capacity on key rail links between Aberdeen and the Central Belt; £24m for the trunk roads programme to support improvements to the key A90/A937 south junction at Laurencekirk; £10m for extension of digital infrastructure in the Aberdeen and Aberdeenshire area above and beyond the commitment through the City Deal and £20m in infrastructure funding to unlock housing sites that are of strategic importance to the local authorities as well as five-year certainty on £130m of affordable housing grant.

Nicola Sturgeon will visit Aberdeen on Monday for meetings with the oil and gas industry where she will make a further announcement of Scottish government action to support innovation, exploration, skills and access to finance for the North Sea industry.

Aberdeen City Council leader Jenny Laing said: “Our City Region Deal recognises the need to continue investment and innovation in the energy sector not only in terms of decommissioning but also in the related technologies that will help deepen our presence in export markets.

“However, the package announced today is only the first stage in transforming the north east of Scotland and I look forward to continuing our discussions with all layers of government.”

Martin Kitts-Hayes, co-leader of Aberdeenshire Council, added: “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.”