Stuart Patrick: National governments should help Glasgow

A brief comment in a press release from EY on its most recent UK Attractiveness Survey caught my eye. The survey has a keen following inside the Scottish Government as it regularly shows that Scotland is the second most attractive place after London for business inward investment and both Glasgow and Edinburgh usually sit in the top five UK cities. That proved to be the case again in 2023, with a record 142 inward investment projects being secured for Scotland.

Ally Scott, Managing Partner, EY Scotland commended the significant role of renewable energy in securing Scotland's achievements. However, he also warned against the dangers of complacency. “We still hear frustrations from clients and the market that Scotland’s tightening economic policies, including the latest income tax hikes and issues around city and infrastructure quality, are causes for concern.”

The state of our city centres undoubtedly impacts perceptions of city quality, especially considering the concentration of FDI projects in these areas. Getting the city centre right is an economic growth issue.

Much of the responsibility for our city centre is laid at the door of Glasgow City Council but given the real terms decline in local government funding should we not also be asking what more our two national governments could and should do?

We are now very well informed on our city centre’s performance. Full reports were recently submitted to the City Centre Taskforce – which I co-chair with Councillor Angus Millar – providing evidence on footfall, hybrid working, customer perspectives and the health of the nighttime economy.

Footfall has been declining year-on-year. Hybrid working seems to be a permanent policy among city centre employers, albeit some larger companies are tightening up their approach, unconvinced of the productivity benefits.

City centre customers are stretched by the cost-of-living crisis but also criticise the cost and availability of public transport and the centre’s unkempt appearance. The night-time economy has been especially affected with its economic output declining since it was last measured in 2014.

There is clearly a great deal to be done and the collaboration between the City Council and the business community has been refreshed this year. There are new working groups on transport, property development, city centre management and the night-time economy; all committed to delivering change.

Public transport providers have been brought together to explore improvements. Private owners and investors are being consulted to encourage development of vacant properties. The perennial challenges of litter, graffiti and anti-social behaviour are being assessed once again. Some major interventions are imminent, notably with £115m of City Deal funding to deliver the improvement of the public realm and with George Square as the flagship project. The feasibility of a Business Improvement District is also due to begin soon.

No single project or policy will revitalise the city centre; we need a comprehensive package of measures and this cannot be accomplished solely at the local level. There are at least three further policies which the UK and Scottish Governments could deliver to support this effort.

The Scottish Government could reconsider its stance on rent controls. There is now more than enough evidence that the current Housing Bill has stifled investment in new rental housing in the city centre. A once thriving pipeline of build to rent housing projects has largely vanished, leaving student accommodation as nearly the only viable option for investors. These investors are convinced that rent controls will make the financial risk of rental housing unjustifiable, prompting them to find opportunities elsewhere in the UK.

While the Chamber will maintain that the principle outcome of rent controls is reduced housing supply, might the government at the very least consider exempting new city centre projects from these controls.

The new UK Government, with its emphasis on economic growth and on housebuilding could also help. Even before the discussion of rent controls, almost all proposals for Glasgow’s city centre build-to rent housing were for new build projects and not for conversion of existing properties.

The high costs of conversion, planning constraints and the increasing demands of net zero retrofit work made the use of empty buildings financially unattractive. Might Rachel Reeves look again at how the tax system could incentivise conversions?

The Chamber has been advised that a fresh version of the Business Premises Renovation Allowance (BPRA) could be one option. BPRA, which ran for 10 years until 2017, successfully revitalised several older city centre buildings as hotels. Could we implement a similar scheme again, but specifically focus on delivering new housing units? Such a programme would also protect both the architectural heritage and preserve the embedded carbon in the many empty office spaces throughout the traditional central business district?

And finally, it is 10 years since both governments made their commitment to Glasgow’s £1.1 billion City Deal, an investment that will help to deliver the city centre’s public realm improvements. The UK Government has made a firm commitment to greater devolution to local delivery and the Scotland Office was in the process of reviewing ways to boost local economic growth when the General Election was announced.

While the term ‘Levelling Up’ may no longer be in use, there is a pressing need to define what additional devolution could look like for Scotland’s regions. We hope that more existing central funds can be released to the regions so that projects to improve public transport or invest in assets like the Scottish Events Campus could be delivered.

We have been promised change and an essential emphasis on economic growth. Investing in our city centre could achieve both.

Stuart Patrick is the chief executive of Glasgow Chamber of Commerce