Lorraine Wilson discovers how the success of the oil and gas sector has been a double-edged sword for the Aberdeen area
On September 4, the Scottish and UK Governments received a Statement of Intent from Aberdeen City and Aberdeenshire councils.
This carefully crafted document was created in order to allow the region to continue being a significant contributor to the Scottish and UK economies.
The driving force for this economic powerhouse has been the oil and gas industry of course, but no one can have failed to notice the difficulties experienced within the sector recently.
This is where the City Region Deal comes in, outlining the continued contribution that this area can make, but only with the support of the Scottish and UK Governments.
Jenny Laing is Leader of Aberdeen City Council and says that the deal is crucial to allowing the area to not only maximise existing strengths but to build on them, making Aberdeen and Aberdeenshire a centre of innovation in the industry.
"What we’ve seen is that the infrastructure in Aberdeen and the north-east hasn’t kept pace with the economic development that we’ve seen in recent times. We want to make sure that we can anchor the supply chain to the north-east. By that I mean the skills, the internationalisation, the expertise, and the innovation that we have built up over the years."
She points to the challenges that the industry has been facing with the maturity of the basin but an investment in infrastructure would allow companies to continue to operate from the north-east. "Most of the companies we have here are operating internationally so we have to make the north-east an attractive place for them to do business."
The expertise and the skills base built up in the region are exportable now, but the challenge is making sure that they remain in Scotland. There are many issues that Aberdeen in particular now faces, not only in oil and gas, but the threat of key workers being priced out of a life in the city.
"One of the key strands that we have to look at is housing," adds Laing. "We have very high house prices in Aberdeen. That has a knock-on effect, not just for those in the oil and gas industry. What we find difficult is getting key workers to come to the north-east, particularly teachers, care workers, all NHS professionals."
Laing recognises that the north-east already offers excellent quality of life with the countryside, the coast and good schools and services, but there is an issue with connectivity to the region. "Aberdeen and Aberdeenshire Councils have invested heavily here, with the western peripheral route a prime example where we have contributed £75 million each. There is a real commitment in the local authorities to provide that infrastructure, but what we are saying to the UK and Scottish governments is we can’t do it on our own."
The benefits filter from the north east to the rest of the UK in more ways than direct financial contribution. There are 440,000 jobs connected with oil and gas in the UK.
Laing said: "Although oil and gas is the sector we are known for, many other areas are quite strong but don’t get the same prominence. Here I’m talking about areas such as food and drink, life sciences, and tourism, which we would like to develop further as well."
The success of the region has been a double-edged sword with some financial challenges and this is part of the compelling argument in the City Region Deal document, which is now under consideration.
Aberdeen Harbour, while not part of the CRD plan, is crucial to the region’s future.
There has already been significant investment over recent years, around £200m, and it is still busy with supply traffic into the North Sea, cruise ships and the ferry service to the Northern Isles.
Laing points out that in the future the harbour must be ready to lead the way in decommissioning, being ready to take on a task that, if it doesn’t lie in Aberdeen, will most likely be taken outside of the UK.
"There is the idea that we are very wealthy up here," adds Laing, "and with the oil and gas sector we have been very fortunate – of course it has been good for the economy. But we are the lowest funded council in Scotland and Aberdeenshire isn’t far behind."
There has been close co-operation with the private sector since the plans were being drawn up and that will continue should the deal be secured.
"We are looking to the future of the region and a partnership between the private and public sectors is crucial if we are to maximise the benefit for the north-east and beyond."
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