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APPENDIX 3: EDINBURGH

The City Vision

A3.1 Edinburgh has enjoyed much success in the last decade. A strong financial services sector, coupled with well developed business services, cultural and entertainment sectors, have led to Edinburgh enjoying an economic boom. Edinburgh is now recognised, along with Glasgow, as a main driver of the Scottish economy. In addition it is now positioning itself firmly as the Capital City.

A3.2 However in 2003, it was recognised that the very success that Edinburgh enjoyed could ultimately constrain its future growth. In Building Better Cities ⁸, it was argued that the challenges that Edinburgh faced were not in creating growth, but of removing the obstacles that impeded it. A tightening labour market, rapid inflation in house prices and commercial lets, traffic congestion and pressure on green belt land all contributed to the notion that Edinburgh's main long term challenge was "growth management". ⁹ Concern was also expressed about the way in which Edinburgh's enhancement of the public realm had not kept pace with its international rivals.

A3.3 Edinburgh's City Vision, entitled "Building a Better Edinburgh", set out the ways in which the city and the wider region might respond to this challenge. Published in June 2003, the Vision outlined several main areas in which Edinburgh had to develop :-

• Improving the physical connections between the city and its "hinterlands";

• Further developing the transport system;
• Enhancing the cultural offer of the city;
• Enhancing the public realm, particularly in the city centre;
• Endorsing affordability, particularly with regard to housing;
• Training and developing the workforce; and
• Working in partnership.

A3.4 In responding to these challenges, Edinburgh outlined 5 themes under which it developed its project set:-

• Connected City;
• Learning and Culture;
• One City;
• Quality Environment; and
• Partnership and Promotion.

A3.5 The Vision document itself was developed in consultation with a number of stakeholder groups, and involved the following key actions:-

• Two meetings with invited representatives of the business sector;
• Two meetings with Community Planning Partners and neighbouring Councils' representatives. Some200 individuals were invited to attend the first 2 meetings in March 2003. They were then invited to 2 recall meetings in May 2003. There were 120 attendees at the first 2 meetings and 96 at the second 2;
• A meeting for the voluntary sector;
• Writing to Community Councils to seek the views of the wider community; and
• Posting the consultation document on the Council's website.

A3.6 Thus the Vision document and the project set were developed using a wide range of consultees, and a concerted effort was made by the City of Edinburgh Council to spread the consultation process as widely as possible given the short timescale available to prepare and finalise the City Vision.

City Growth Fund Projects

A 3.7 Edinburgh developed 14 specific projects that were to receive CGF funding. These are outlined in Table A3.1 on the next page. The purpose of this table is to outline the nature of each of the projects, and to demonstrate the "fit" that each has within the typological framework developed by the consultant team.

TABLE A3.1 Edinburgh City Growth Fund Projects and Original Budget Allocation

A3.8 The financial allocation for each of the projects has been reproduced from the City Vision, and as such represents the initial allocation that each project was to receive. From the table, it can be seen that Edinburgh made its single biggest allocation of £9.5m to the category of Streetscape. Of this, £8.65 million was allocated to improving the City Centre, which was identified as a significant priority in Building Better Cities. Other significant allocations were made to the improvement of Public Transport Infrastructure (£4.845 million), and also to Cultural Investment (£3.2 million).

Capital/Revenue Split

A3.9 The Executive primarily intended the Cities Growth Fund to be used to support the development of capital infrastructure projects, although some provision was made to finance revenue projects, or to provide a revenue funding stream to predominately capital funded projects. However, The City of Edinburgh Council argues that revenue funding for the cultural and festival events, that define and position the Capital City, are essential and should be fully recognised in the configuration of the Cities Growth Fund. The Council's argument is that:-

• The Executive's Building Better Cities recognises that Edinburgh "punches above its weight" in the area of cultural development and that has benefits for all Scotland and so should be financially supported by the Cities Growth Fund;
• Edinburgh is recognised internationally as an "events city" and its economic growth and development is strongly linked to events and event related tourism;
• Cultural development of both the assets in the City and through the promotional efforts of the Council is an essential part of the development vision for Edinburgh. This is the approach adopted in Europe, for example in Barcelona and increasingly in the United Kingdom with the designation of Cultural Capitals and warrants support from the Executive.

A3.10 Table A3.2 shows the percentage of Edinburgh's total CGF allocation split across project types and the percentage capital: revenue split. It also shows the proportion of the allocation that was allocated to projects that contained a capital and revenue element.

A3.11 It can be seen that the greatest proportion of Edinburgh's CGF monies was allocated to the theme of Streetscape (38%). What can also be seen is that 50% of the total allocation to capital projects was devoted to Streetscape, which accounted for only 5% of the revenue allocation

A3.12 Reflecting the importance ascribed to the sector by the Council, a quarter of the revenue allocation was spent on events (the Winter Festivals) whilst a fifth was intended for Cultural Investment. This was allocated solely to the Theatres Transformation Fund, as the other project in this category involved only capital spend: the renovation of the Usher Hall.

TABLE A3.2 Capital and Revenue Split of Edinburgh Projects

Note: Percentages do not add to 100% due to rounding/.

Leverage

A3.13 In order to secure CGF funding, each of the cities had to demonstrate potential sources of funding that would complement those distributed through the CGF. Drawing on evidence from the Final Annual Report published in 2006, Table A3.3 shows the extent to which Edinburgh managed to attract other sources of funding. ¹⁰ Again, this is broken down using the project typology.

A3.14 Of the £29,874,000 which Edinburgh has claimed as the total leverage over the period 2003-06, 94% came from public sector sources. The remainder came from the private sector, and was attracted by the Winter Festivals. Of public sector leverage, the largest sum (£11.65 million) was attracted by projects classified under the Streetscape theme. Of this, £8.65 million was contributed by Scottish Enterprise Edinburgh and Lothian, whilst the remaining £3 million came from Lottery funding.

A3.15 However, the Council has argued that levering private funding is difficult owing to the short term nature of the CGF. In progressing the development of the Waverley Station project, the Council appointed the consultants PWC to examine innovative forms of funding for major infrastructure projects. With regard to the CGF, the consultants concluded that:-

• Its short term nature created project planning problems; and
• The uncertainty over the continuation of the CGF coupled with its short term nature made levering in private finance difficult.

A3.16 Other significant public sector funding was attracted by projects in the Cultural Investment category. The majority of this funding (£5.2 million) was attracted by the renewal of the Usher Hall and was provided by a range of partners including the Scottish Arts Council Lottery (£2.903 million), the Heritage Lottery Fund (£1 million), and Scottish Enterprise Edinburgh and Lothian (£1.3 million). European Social Fund monies (£0.875 million) were used to support the project in the Training/Education theme, whilst the remainder came from Scottish Enterprise Edinburgh and Lothian (£0.075 million) and other partners (£0.3 million).

TABLE A3.3 Public and Private Sector Leverage in Edinburgh

Fit Between Projects and City Vision

A3.17 The Council has demonstrated that the 14 projects submitted to the Executive for Cities Growth Fund support fit well with the priorities set out in the City Vision. The Vision set out the areas in which progress had to be made, and the resultant projects reflected this. Table A3.4 shows that the projects across each of the typologies matched the priorities as set out in the Vision document.

TABLE A3.4 Fit Between Projects and City Vision

Progress with City Vision Projects

A3.18 Table A3.5 shows the extent to which projects in each of the themes had spent their original allocation (as of the final evaluation report published in 2006).

A3.19 Projects which spent the largest proportion of their original allocations were in the categories of Community Participation (72%), City Marketing (94%), and Events (79%).

A3.20 However, there was also significant underspend across a number of project categories. As can be seen, a third of total underspend was attributable to Streetscape projects. There was other significant underspend in Transport Infrastructure (22%) and domestic Property (22%) projects.

A3.21 Underspend in Streetscape can largely be attributed to delays in the redevelopment of the City Centre Public Realm. As of summer 2006, £4.040 million remained unspent from a total CGF allocation of £5.178 million. Whilst £3.472 million was transferred with Scottish Executive approval to projects including the Winter Festivals (£1.732 million), Community Planning and Major Projects (£0.950 million) and the Edinburgh International Festival (£0.3 million), there were a number of other explanatory factors for this underspend, including:-

• The delay in the plans for George Street due to the potential impact that this project would have on other projects outside the CGF. The project was delayed further in 2004 due to the reallocation of funds from this project to West Bow and the east of the Grassmarket;
• The short timescales imposed by the CGF not being conducive to the planning and development of capital projects in a city like Edinburgh where a complex range of factors bear upon major projects, particularly those undertaken in the City Centre; and
• The need for consultation with stakeholders, residents, traders and conservation bodies with regard to both the Grassmarket and St Andrews Square projects.

A3.22 Underspend with regard to Transport Infrastructure projects can be attributed to the programme of Bus Information and Improvements in the City, which, as of summer 2006, had underspent by £2.169 million. This was largely attributable to the process of designing and tendering for improvements to 200 bus stop locations, and applying for planning permission for those stops located in conservation areas.

A3.23 Underspend in Property (£2.808 million) was due largely to delays in identifying a suitable partner that was willing to become involved in the Affordable Housing project. The development of a Masterplan for the area, and the way in which the project would fit into the Masterplan, was also a factor that caused progress to be slower than anticipated.

TABLE A3.5 Project Spend and Underspend

Spending Outwith the City

A3.24 Despite a consultation process that involved the input of neighbouring councils, the project set that was eventually finalised had no projects outwith the city of Edinburgh itself. Although ideas were put forward from these councils for projects that could have been supported by CGF funding, these were rejected due to the prohibitive amount of preparatory work needed to get them to the stage of realisable projects. The Council believes, however, that there will be clear benefits to neighbouring authorities from the development of the agreed projects as:-

• Transport enhancements will assist in movement in and around the city and offer the opportunity for extension to the city region;
• The 'cultural offering' of the city will be improved and that will benefit all SE Scotland; and
• The city region branding project and the Joined up for Jobs initiative both have direct implications for the neighbouring councils who are partners in Edinburgh's economic and marketing strategies.

Impacts

A3.25 The Council values the CGF initiative and makes the point that a number of key projects - public realm being the most significant - would not have commenced without the Fund's support. Equally, it is accepted that owing to the factors highlighted above (with regard to underspend) progress has been slower than first hoped. Although the basket of projects was broad, and covered 8 of the 11 developed typologies, there has been significant project slippage in key areas. For example, delays in the implementation of Transport Infrastructure Improvements and to improvements in Streetscaping have meant that challenges identified in Building Better Cities have not been fully addressed. Further, a number of delays have prevented the full implementation of the Property project "Affordable Housing".

A3.26 Cognisance must, however, be taken of the complex nature of these projects and the multi-agency approach required to implement them. Indeed, given the nature of the timescales involved in developing the City Vision, and the long lead in times in obtaining planning permission and suitable partners/contractors, it is not surprising that there has been some slippage.

A3.27 Edinburgh has enjoyed some notable successes in this period, particularly in the category of Events. These have included attracting the MTV Awards to the city in 2003, an event which was part-funded using CGF allocation. The economic benefit of this event to the city region has been calculated as £6.7m, with an £8.9m benefit to Scotland as a whole. In addition the Winter Festivals have had an increased economic impact for the city, which has increased from £35 million in 2004/05 to £37million in 2005/06.

A3.28 It is now expected that 10 of the 14 projects will be fully delivered in 2006/07. Three of the projects (in the categories of Transport Infrastructure Improvements, Property and Streetscape) will slip into 2007/08.

Additionality

A3.29 The evidence suggests that the CGF has allowed previously resource constrained projects to proceed, such as those that are to improve the public realm in the city centre. Without the CGF funding, these capital intensive projects would not have proceeded. CGF funding also allowed match funding from Scottish Enterprise Edinburgh and Lothian to be secured for enhancing the public realm. Other examples include:-

• The renovation of the Usher Hall, the funding for which would not have been available without the CGF, and for which levered funding would not have been secured without CGF; and
• The further development of the Winter Festivals and the International Festival, which have grown in scale to meet demand and to retain competitive advantage. The Council did not have adequate resources to support this growth and development without input from the CGF.

Project Management

A3.30 Both rounds of the CGF have been managed by the Council's Departments of Finance and Corporate Services. Officers of these departments sought input and potential projects from other key departments. Lead officers in each department were identified to act as "collecting and information points" for prospective projects and for monitoring information on current projects. Similarly contacts with external bodies including the local enterprise company and the neighbouring councils were overseen by lead officers from these 2departments.

A3.31 In all external bodies contributing projects or finance lead officers were identified to be the main point of contact with the Council. Officers in Finance and Corporate Services drew the information together, serviced the process and established working groups to progress the CGF bids.

A3.32 Once a set of projects had been identified then these were taken through the Council's Management Team ( CMT), the Council's premier officer group made up of directors and chaired by the Chief Executive. This process secured corporate agreement to the projects and provided officers with such things as advice on next stages and other groups and organisations that needed to be approached. Regular briefings of key members were also undertaken. The Leader, in particular, was kept informed at all stages about developing packages of proposals and projects.

A3.33 The CGF1 process operated as a series of iterations with new proposals being developed and tested against broad evaluation criteria. In this way long lists of potential projects were reduced to an agreed and evaluated set for submission to the Executive. It is worth noting that in agreeing the Investment Plan for the second round of the CGF in October 2005, the Council requested more frequent monitoring and review material on the individual projects and the progress of CGF implementation in Edinburgh.

A3.34 However it is now recognised that this process was too centralised and put increasing pressure on small number of officers. Other weaknesses in the approach to project evaluation were also apparent. As a consequence it has been agreed that a Prince2 (Projects in Controlled Environments) methodology should be adopted for all CGF2 work. . A Reference Group, made up of senior officers from the main contributing departments, has been established and meets each month. This group has responsibility for monitoring the agreed projects and preparing all the monitoring, evaluation and review material that the Council has requested. It has also been agreed that a full Project Board, chaired by the Chief Executive, will be established as the decision making body for all CGF work. As a partner to the Reference Group, a separate group has been established with the neighbouring councils.

A3.35 For the new CGF2 projects legal agreements have been drawn up, setting out the terms and conditions of grant support for those projects being delivered by adjacent authorities.

Scottish Executive

A3.36 Overall the CGF1 process has been very "hands off" as far as the Executive has been concerned. There were no questions about the Vision or the initial round of projects, all of which were accepted. There was slightly more scrutiny for the second round, mainly around the capital:revenue funding split. However, again this was limited. Good personal links were established between the City and the Executive's CGF staff with the Executive being felt to have a strategic understanding of what the City was trying to do, allied to an informality of approach that meant that decisions could be made quickly. There was also felt to be an understanding of the uncertainties inherent in capital projects that meant the slippage was often almost inevitable.

A3.37 In retrospect it was felt that clearer guidance about the financial nature of CGF should have been provided at the start, as there was initially a lack of clarity as to whether it was for capital or revenue projects. As indicated above, this remains of central concern to the Council which continues to emphasise the importance of major revenue projects to the Capital City.

A3.38 There is, however, a fear that there could now be more detailed financial monitoring which could see some of the flexibility that has distinguished CGF from other Executive funding schemes, being lost.

Other Benefits

A3.39 Edinburgh has identified a number of wider benefits that have accrued from the implementation of the Cities Growth Fund:-

• The Cities Growth Fund has provided a focus for the benefits of collaboration with other cities in Scotland, particularly Glasgow; and
• There has been a concerted strategic approach to Community Planning in both Edinburgh and the city region, and links and networks between partners in the city region have been developed as a result.

Good Practice

A3.40 Edinburgh's implementation of the City Growth Fund has exhibited good practice in a number of areas:-

• Strong leadership from both politicians and senior officers;
• Engagement with neighbouring local authority areas;
• The use of an explicit assessment framework to select projects thereby ensuring their strategic fit with the aims of the City Vision; and
• The influence that the City Vision has begun to exert over the wider priorities of other agencies within the city.

The Future

A3.41 The City of Edinburgh Council responded well to the Building Better Cities initiative and welcomed the introduction of the Cities Growth Fund. The Council's stance can be summarised as:-

• Although a number of cities felt that the fund was pitched at too low a level, the Council put effort into identifying projects that met the criteria set by the Executive;
• The Fund is a significant addition to the Council's budget and has allowed the further development of existing projects and the initiation of projects that would have stalled without its support;
• Implementation of projects requires both continuity and certainty in funding and there is concern that the short term nature of the CGF does not offer this to Edinburgh;
• The scale of the capital projects in the city and the difficulty of levering private funding within the existing CGF arrangements argue for a more flexible form of funding or a major increase in the scale of CGF allocations; and
• There is concern that the Executive does not recognise the importance of major iconic and city-shaping revenue projects in Edinburgh which, if unfunded, would have a major impact on the economic prosperity of the city and all Scotland.

A3.42 In summary, the scale of some of the investment needed in Edinburgh means that parts of the Vision can only be realised if it is possible to attract substantial private sector investment. This will only happen if funding horizons are long term, something that is currently not inherent in CGF. The Council believes that there is now a need to look at more innovative ways of levering in money to support streetscape activities such as, for example, allowing local authorities to retain a share of any growth in business rates that is attributable to environmental investments. The Council and its partners, including Glasgow City Council, strongly support piloting the LABGI (Local Authority Business Growth Incentive) scheme on a small number of large projects in Edinburgh and Glasgow. The scheme currently operates in England and Wales and it is felt that a more flexible and enhanced version of the scheme would significantly improve private sector leverage in key development projects

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