John McLellan: Edinburgh must be open for business

Artist's impression of the proposed redevelopment of the Edinburgh St James Quarter.''TIAA Henderson Real Estate
Artist's impression of the proposed redevelopment of the Edinburgh St James Quarter.''TIAA Henderson Real Estate
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If there were doubts about the strength of the economic recovery, they will have been blown away by the International Monetary Fund’s prediction this week that the UK will grow faster than any other G7 nation in the next two years.

Compared with 0.8 per cent growth in the eurozone, the UK is expected to motor ahead on 3.2 per cent and the IMF’s chief economist, Olivier Blanchard, said Britain is “leaving the financial crisis behind”.

Now we are also leaving the uncertainty about Scotland’s monetary future behind, Edinburgh should be in pole position to take full advantage of growing confidence as investors look to identify opportunities with good prospects of a healthy return.

Mr Blanchard is even encouraging governments already saddled with crippling debt to relieve the burden by borrowing even more at low rates to stimulate their economies. Solving your debt problem by taking on more debt sounds like the kind of advice Wonga might give, but with European Central Bank interest rates as low as 0.05 per cent, it’s easy to see where he is coming from.

Here, the Scottish Government and its Scottish Futures Trust arm is, after a slow start, proving adept at squeezing value out of big projects, which should make Scotland an even more attractive place to do business.

Only this week the Scottish Government was able to announce that due to prudent management the new Forth crossing will come in at £50 million less than the last estimate.

At the same time SFT chair Sir Angus Grossart hailed his organisation’s success in saving £132m last year, the fourth year in a row the SFT has delivered efficiency savings of over £100m from public infrastructure programmes like school building.

This will not have been achieved by strong-arming contractors to do more for less, but by ensuring deals are mutually beneficial and watertight without the kind of sloppy agreements which bedevilled both the parliament and tram projects. That means costly overruns and legal wrangles are less likely and contractors can therefore manage their resources more efficiently.

With a wily old financial fox like Sir Angus overseeing the SFT’s contracts, they also tightened up the expensive and severely-criticised private finance initiative system behind projects like the new Royal Infirmary.

So despite such high-profile examples of mismanagement as Holyrood and the trams, Scotland should now have a growing reputation as a place where big projects are well run so that investors, contractors and the public all benefit. And this against a background of increasing confidence in the economic future.

It should mean the cash tap stays open and in turn that should mean more jobs and opportunities. The challenge then, especially in the east, is to ensure there is a ready supply of skilled labour to meet demand, something which was a problem in the years leading up to the crash of 2007-9.

The number of people claiming the Jobseeker’s Allowance in Edinburgh fell to 2.2 per cent in August, which basically means not many people ready to take up vacancies.

But over 11 per cent of Edinburgh’s working age population is claiming benefits of one kind or another, some 38,700 people, and nearly 5000 of them are 16 to 24-year-olds. Many will not be fit for work due to ill-health, but with the right training and education the manpower is there.

There are warning signs. Number one is that rising confidence in manufacturing and construction is not reflected in retail, perhaps because household incomes are still tight and ordinary people are not comfortable enough to increase spending.

That might be one reason why total Edinburgh city centre footfall actually fell 9.1 per cent in August compared with 2013 (with an even more dramatic fall of 15 per cent in the evening) which analysis by the Essential Edinburgh business group blames on wetter weather.

Although retail confidence is higher than it was last year, the trend is now downward and to improve significantly we need more people with more money in their pockets and that means more and better-paid jobs.

Another omen is the absence of new foreign investment projects announced here in August, although this might be down to companies holding off until the referendum result was known. The next set of statistics will be telling.

If there is one dark cloud over the Scottish economy it’s offshore, where concerns about the future cost of oil and gas extraction continue to grow. Last weekend the third biggest North Sea operator, US-based Apache, was reviewing its overseas operations and the sale of its UK interests is an option.

Apache specialises in extracting more difficult reserves from established fields, like Forties, and in the second quarter of this year it extracted some 2000 fewer barrels a day than in 2013. So if experts like Apache decide the North Sea is too big a headache then the Scottish economy will have a migraine.

The Fraser of Allander Institute estimates Scottish growth next year will be a comparatively modest 2.2 per cent and with manufacturing 
confidence nationwide still precarious, a problem in the North Sea becomes a problem for us all.

In turn that means Edinburgh really needs to fire on all cylinders; to get its big projects like the St James Quarter up and running, to make sure a well-trained, motivated and flexible workforce is available, that transport links are up to scratch and the legal and planning framework is properly geared up to take full advantage of new ideas and proposals.

Edinburgh needs to make sure the world knows it’s open for business.


THE outrage at Edinburgh City Council winning an award for “turning around” the trams project was all too predictable.

I didn’t know there was such a thing as the Light Rail Awards, but its judges praised the efforts of chief executive Sue Bruce and transport convener Lesley Hinds for their strong leadership.

There is no doubt Ms Bruce was able to bash heads together to make progress, but for “turning around” read “accepting the inevitable or face writing off nearly

£1 billion for nothing”.

Awards are nice to get, but this one might have been best avoided.

It is the season for transport awards, though, and those campaigning on behalf of the elderly and disabled might join taxi drivers in raising a few eyebrows at the gong picked up by construction giant Balfour Beatty at last month’s National Rail Awards.

It won the Project of the Year accolade for the refurbishment of Waverley Station, which has unquestionably improved the experience once you’re inside and expanded the number of platforms, but at the expense of traffic chaos up at street level.

But the champagne will be well and truly flat for the Rail Operator of the Year winner at last week’s National Transport Awards because for First ScotRail the reward this week was for the Scottish Government to strip it of the franchise.

As they say, one day the cock of the north, the next a feather duster.

Now Dutch train operator Abellio, which runs three other rail franchises in England including the north-east, will have its work cut out to deliver a noticeable improvement in the services used by the vast majority of train travellers.

Challenge number one in the east will be to make the Borders Railway into more than a joy ride for shoppers and tourists when it opens, but with the line and station capacity not in its gift that’s not easy.

• The National Transport Awards are organised by Transport Times magazine, published by none other than our old friend and former city transport supremo Professor David Begg. He not only chairs the judging but was until recently a non-executive director of ScotRail’s parent company, First Group. Small world, transport.

Edinburgh Airport and Lothian Buses just missed out on the top awards in their categories, with both being highly commended as runners-up to Heathrow Terminal 5 and Reading Buses respectively.

Get a move on

The penultimate act of the Craighouse drama has been played out with the Scottish Government refusing to re-examine the permission granted to the scheme by the city council.

SNP MSP Jim Eadie described the decision by his colleague Derek McKay as a “bad day for Edinburgh and a bad day for Scotland” because, he argued, if building is allowed on one of Edinburgh’s hills it will be allowed anywhere.

Except, of course, Craighouse has already been built on, extensively and recently, so this is hardly a green light to build on any open space.

Mr Eadie went on to criticise the council for not accepting what he described as a “robust case” put forward by local objectors for converting the old hospital buildings without the need for any new construction.

But the sketchy alternative had no detailed designs, costings or management plan so unless Mr Eadie saw a dossier which even now remains secret, on this occasion his idea of “robust” is, shall we say, open to interpretation.

Although there are still rumblings about community-buy-outs and judicial reviews, the last act is to get the approved scheme built as quickly as possible, and as the developers have said they could start the day after permission was granted, they should get a move on.

School places stumbling block for Miller

As one saga ends so another is about to begin, with views of locals now being sought about a new plan for 220 houses and an Aldi supermarket in Portobello.

Not everyone will be happy, but the old Scottish Power site at Baileyfield can’t lie dormant for ever. The signs are that this latest scheme might meet fewer objections than the last attempt because the supermarket is not on such a scale as to pose a significant threat to businesses on the High Street. And those businesses should benefit from the arrival of 220 new households.

Even if local objection is strong, there is still the headache of housing supply across the city and if plans for a disused industrial site fail then where else can the homes be built?

Over at Alnwickhill, there have been few objections to a similar number of houses proposed by Cala homes for the now defunct reservoir site, apart from one or two existing householders worried about being overlooked. That plan was approved this week so it would be something of a shock if the Baileyfield plan didn’t finally go through.

But at Gilmerton, rather than green belt issues, the cost of paying for school places is a significant stumbling block for a new Miller homes scheme. Such an experienced builder will accept that if local schools are full, they need to meet the cost of new places

It is estimated the education provision will add £20,000 to the price of each home, and balancing the asking price with likely demand so far out of town will be hard.