Capital chief exec: “Edinburgh has to think of itself as a global city”

Council chief executive Andrew Kerr. Picture: Greg Macvean
Council chief executive Andrew Kerr. Picture: Greg Macvean
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SITTING in his office in Waverley Court, Andrew Kerr is thinking back on a whirlwind 12 months in charge of the Capital.

The city council’s chief executive has pressed ahead with plans to overhaul local government as part of a £148 million savings drive, delivered the first 20mph network in Scotland and declared Edinburgh’s 74.4 per cent Remain vote in the recent EU referendum.

Ahead lie many more challenges, starting with negotiating the crucial City Deal which will bring £2 billion worth of funding for key infrastructure projects.

And at festivals time, with recent figures showing Edinburgh’s year-round events now generate around £313m for the Scottish economy, it’s appropriate that one of the deal’s main aims will be to boost culture spending.

Pressures on the council’s budget and competition from rival cities eager to steal Edinburgh’s festival crown show no sign of easing, sparking warnings from Mr Kerr that the current funding arrangement is “not sustainable”.

A proposal to devolve responsibility for setting and collecting a transient visitor levy, or “bed tax”, was included in a City Deal package presented to ministers.

It is hoped such a charge could generate up to £15m annually for the festivals, including cash for investment in areas such as street cleanliness.

However, after the idea sparked an outcry among 
tourism industry leaders, and amid signs the UK economy could be about to slip into recession, Mr Kerr is quick to stress it is one of a range of tax and funding options being negotiated.

“I am agnostic about which way it comes,” he says, “as long as there’s the recognition that we are making a big financial contribution to the country, not just to Edinburgh, and that we need to be able to sustain that – and it’s not sustainable at its current level for very much longer with Edinburgh’s financial situation.

“We are still saying to the government, whether this is a tourist tax or any other way of finding this money, that we need something that sustains the cultural offer of this city.

“That’s because it contributes big tax revenues to the country, it’s a growth sector and we are the only place that can make that happen.

“Hundreds of thousands of people are coming through our doors over the next month. It hammers Edinburgh a little bit in terms of infrastructure.

“[The funding solution could be] retention of business rates, VAT, or a direct contribution from government. Hypothetically, you could take a cut of the VAT that’s generated by the tourism industry and that would be reserved for Edinburgh.

“We have to agree that if we want to find a way of doing this then we need to find the right route. It looks like it’s going to be some form of tax or tax revenue being given to Edinburgh.”

Acknowledging concern among hospitality firms following reports of the bed tax bid, Mr Kerr adds: “I think, 
honestly, we’d be happier if we find another way of doing it, as long as we find the right way.

“Because the outcome is to sustain the cultural offer of Edinburgh and ensure it continues to be successful, and that’s for everything from its festivals to its physical infrastructure.”

Culture is only one element in Edinburgh’s proposed City Deal, which includes the three Lothian councils, Fife and the Borders.

Current population trends indicate the Capital could become the country’s biggest city in the next quarter of a century – bigger than the City of Glasgow council area – placing additional pressure on housing and transport services.

For Mr Kerr, ambition and vision will be as important as money in the drive to ensure Edinburgh can cope with future demand.

“Edinburgh has to start thinking of itself as a global city and how it can be competitive in Europe,” he says. “In a short space of time – 20, 25 years – we will be the biggest city in Scotland. We need to start preparing for Edinburgh being that size of city – not half a million, but three-quarters of a million. That’s preparation in terms of infrastructure, housing, all those things that make a successful city.

“Given that Edinburgh is the only growing part of the Scottish economy, it is the sensible thing for both the Scottish and UK governments to invest in Edinburgh – that’s the case we’re making for why the deal should be as large as £2bn.”

He adds: “We’re still opening up the city in terms of transport infrastructure, both west and east. And the City Deal is still about innovation through the universities and the very big strengths we have there.”

Mr Kerr says he is happy with progress made since he took over from predecessor Sue Bruce.

But he admits there is much to do and says a focus on improving “basic services” will be one of his key priorities over the coming months.

“When I came here, and we knew there were financial restrictions and austerity coming our way, we didn’t really have a clear plan for dealing with that, and now we have,” he says.

“We also have to make sure that we’ve got basic services delivering for our citizens and ensure they do that to a high level – that’s bins, roads, and so on. That doesn’t mean we need more money. It just means we need to do things differently.”

Responding to calls for more support for Edinburgh’s culture sector, Scottish Government officials said they were “absolutely committed” to the City Deal.

They also confirmed they had no plans for new taxes on the tourism sector given it is already subject to the second highest VAT rates in Europe.

A spokesman said: “Edinburgh festivals have benefited from over £17m Expo funding since 2008. Despite ongoing cuts to our budget, we have always treated local government very fairly. The funding package for 2016-17, amounting to over £10.3bn, was accepted by all 32 councils.

“Edinburgh City Council’s share of this is almost £786.3m this year, which includes £11m additional funding that Edinburgh receives through the new funding floor mechanism and £3.9m in recognition of its position as capital city.”

A UK government spokeswoman said: “While tourism and culture policy are devolved matters, the UK government recognises the importance of the cultural sector in Scotland to wider UK economic prosperity. We are working closely with leaders in the Edinburgh city region as they develop proposals for a City Deal.”