Centre for Cities report shows Scots hit by economic decline

Analysis shows Aberdeen has been hit hardest of any city or large town in the UK by weak productivity growth with its shortfall sitting at £45,240.

In a comparison of disposable income compared with predictions based on 1998 to 2010 trends, total disposable income per head in Glasgow was £23,500 lower than it would have been.

Dundee was found to be £17,730 down while the figure for Edinburgh was £16,030.

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At the UK level, people have been left with £10,200 less to spend or save on average since 2010 than if the economy had grown at pre-2010 trends.

Speaking to The Herald, Paul Swinney, Director of Policy and Research at Centre for Cities, said: "Part of this report is about trying to highlight just the scale of the challenge that is now faced.

"It feels as if the last 13 or 14 years have been spent arguing about things like Britain's relationship with Europe and about immigration while all this has been going on.

"It's happened without people or politicians seemingly being aware of it.

"So I would hope now that seeing these types of figures it becomes clearer that actually, we have got a big problem and a big challenge on our hands.

"This thing that seems quite abstract - productivity growth - actually is having an impact on something which is very tangible, which is the amount of money in the pockets of the people who are answering the doors that these politicians and prospective politicians are going to be knocking on.

"Residents of Scotland seem to be hit harder by this decline, this economic malaise, than other parts of the country."

While the number of jobs increased, weak productivity growth meant that growth of disposable incomes was underwhelming, the report shows, and this underperformance is reflected across the UK.

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In Aberdeen the stark shortfall is attributed to changes in the oil and gas industry however, elsewhere, decline was apparent in both places that have struggled with the departure of local industries and places with more dynamic local economies.

Overall, Scotland has added 166,190 jobs since 2010 with Edinburgh showing a net job growth of 18% and Glasgow 11%.

However, the report - Cities Outlook - shows productivity growth – a key driver of wages – was weak and lagged pre-2010 performance in all cities in Scotland.

Dundee was no more productive in 2021 than in 2010. Meanwhile, housing costs have increased in most places with housing becoming less affordable in all Scottish cities except Aberdeen.

Rates of children in relative poverty have risen in every city, rising 8.4 percentage points between 2014 in 2021 in Glasgow.

Andrew Carter, Chief Executive of Centre for Cities, said: "Both the two main political parties have pledged to grow the economy and the general election debate will have growth at its heart.

"The challenge for the next Government is to go beyond the rhetoric and to do what’s needed to make this rhetoric a reality.

"The UK has had a torrid time since the Great Recession.

"Everywhere, up and down the country, including places that were doing relatively well before, has been levelled down because of the lack of growth.

"To get growth in every place, the next Government needs to act at a radically different pace and scale, and mark the beginning of a multi-decade policy programme."

Centre for Cities advocates for increased investment in cities with a view to a trickle out benefit to surrounding towns and communities.

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Its report highlights Rishi Sunak's speech to last year's Conservative party conference in which the prime minister, in an appeal to Red Wall voters, said the economy had been too focused on cities and the economic geography should shift towards towns.

Mr Swinney said: "It's very obvious that the prime minister thinks that there are votes to be won by talking about towns not cities.

"I think the reality is that is exactly the wrong position.

"It's very hard to see how we will increase the prosperity of the many settlements, for example, around Glasgow if we don't do something about the continual performance of Glasgow itself.

"When we look at the relationships that big cities have with their surrounding towns across the UK, those big cities that are successful have a number of very prosperous towns around them.

"So for a more prosperous Strathclyde region and for more prosperous Scotland, we absolutely need a more prosperous Glasgow in particular.

"That doesn't mean we ignore everywhere else, but it also means you can't ignore Glasgow."

Mr Carter added: “The first step in a realistic approach to grow the economy is to recognise that the British economy is an urban economy.

"Cities account for nine per cent of the land and more than 60% of the economy, as well as 72% of high skilled jobs.

"Their slowdown is at the heart of why the national economy is struggling. There is no plausible way of achieving higher growth without increasing the innovation and dynamism of urban Britain.

"This means reforming the planning system to enable cities to grow, devolving more powers and financial freedoms to encourage our big cities to make decisions that support growth, and following the levelling up rhetoric with bold actions."

Only seven places – Aldershot, Bristol, Derby, Northampton, Slough, Telford and York – had cumulative disposable incomes that were higher than 1998 to 2010 growth rates would have achieved but this is because their pre-2010 performance was underwhelming.

In order to improve the economic fortunes of the UK, Centre for Cities makes several recommendations for the incumbent government following a general election this year, one of which is planning reform.

Mr Swinney added: "Both Labour and Conservative have made noises around productivity.

"They've both been talked about the need for long term plans and talk about growth needs to be central but I don't think either of them, despite this rhetoric, have come out with any clear plans as to what it is that they would do differently.

"If we look at planning in particular - with the caveat the planning system in Scotland is a little bit different - I think Labour and Conservatives have said they're going to be a party of building and labour has been particularly forthright about that.

"But they haven't put any detail underneath that.

"In the context of ongoing arguments around immigration, growth discussion is not top of the agenda and it should be because these stats show just how the UK economy as a whole has struggled since 2010.

"Every part of the UK has struggled and the implication for that is people are thousands of pounds poorer as a result."