Audit Scotland warns of 'limited transparency' around city deals

Audit Scotland has slammed the Scottish Government’s failure to measure the overall long-term success of the City Region and Growth Deals programme and called out “limited transparency” around the approval process for projects that are funded by the deal.

The Auditor General and Accounts Commission today released a scathing report on city deals, which states: “five years after signing the first deal, the Scottish Government has not set out how it will measure their long-term success, how it will know if deals are value for money, or how deals will contribute to the outcomes in the National Performance Framework.”

Audit Scotland said that while the city deals programme had been good for Scotland’s economy, enabling economic development which may not otherwise have gone ahead, the government had “not set out how it will measure the programme’s value for money”.

The spending watchdog said it was not “clear why some deal projects were approved for funding over others, while local communities have had very little involvement in deals”. “These two factors have limited transparency around the process,” it said.

So far, the scheme has seen £5.2bn committed to supporting economic development in all parts of Scotland, funded by the UK and Scottish Governments, councils and partner organisations.

Auditor General for Scotland Caroline Gardner said the programme’s “lack of aims and objectives” meant that opportunities “may already have been missed to ensure deals contribute to national outcomes”.

“The Scottish Government needs to show how it will measure deals’ long-term success and work with councils to improve transparency around the approval process for individual projects,” she said.

Chair of the Accounts Commission Graham Sharp said it was important that “lines of accountability” for the deals were made clearer and “that the right staff are in place to develop and deliver deals at a time of considerable financial pressure for councils and the wider public sector”.

The report sets out clear actions for the Scottish Government, including that it sets out “clear aims and objectives for the overall deals programme” detailing how it will help deliver “inclusive growth”.

It recommended the government explain “in medium and long-term” financial plans of how it will fund deals from its budget and develop arrangements to measure the impact of the deals programme overall.

The report called for the government to clarify how partners should plan, measure and report on the impact of individual deals, including delivering inclusive growth.

The government was encouraged to work with councils to consider how to make information about the reasons behind funding decisions and project selections for signed deals publicly available “to promote understanding and support effective scrutiny”.

Scottish Greens co-leader Patrick Harvie said the city region deals should be realigned behind efforts to lower emissions.

“This could have been a huge opportunity to redesign communities and local economies to tackle the climate emergency, but Audit Scotland’s report demonstrates the complete lack of focus,” he said.

“Communities have also been denied a say about how the money should be spent. This report should be a wake-up call to the Scottish Government. Scotland’s city and region deals need to stop financing failed old models of city planning like bypasses and flyovers and be re-profiled to prioritise efforts to lower emissions and build the sustainable, inclusive cities of the future.”

Labour infrastructure spokesperson Colin Smyth said the report reinforced concerns raised two years ago by the Local Government Committee. 

“While investment from growth deals is welcome and badly needed, the process for developing deals is ad-hoc, negotiated in secret, with little input from local communities. Where responsibility lies if something goes wrong with a growth deal is far from clear,” Smyth said. 

“As a result, why certain projects are chosen over others can be a mystery. It’s also clear that the level of investment in growth deals does not compensate for the Scottish Government’s cuts in council budgets, leading to badly needed local infrastructure projects being axed.”

Public Audit Committee convenor Labour MSP Jenny Marra said the committee would “explore the transparency of project selection and funding decisions”.

“The positive potential offered by city deals by way of increased investment, collaboration between councils and their partners and overall economic development in Scotland is clear. This report, however, highlights concerns around how the Scottish Government intends to measure the initiative’s long term success and its contribution to the National Performance Framework,” she said. 

Cabinet Secretary for Transport, Infrastructure and Connectivity Michael Matheson said the government welcomed the report, “which clearly highlights the positive effect that City Region and Growth Deals are having across Scotland”.

“Including our additional investment, Scottish Government’s commitment to deals now exceeds £1.8 billion and we are already taking steps to improve how we measure the long term success of our deals programme,” he said.

“Together with UK Government and our local government colleagues, we will reflect on these recommendations as we take forward existing and new deals to ensure the best possible outcomes for the people of Scotland.”

The city deals provide long-term funding programmes over 10 to 20 years, with four deals signed to date: Glasgow City Region, Aberdeen City Region, Inverness and Highland City Region and Edinburgh and South East Scotland City Region. Four more deals have been agreed in principle: Stirling City Region Deal, Tay Cities Deal, Ayrshire Growth Deal, and Borderlands Growth Deal.