How much has Aberdeen missed out on benefits from the oil era?
It’s a more interesting question than the usual story about how well Aberdeen has done, with a pause now to consider how the possibly terminal downturn in oil-related activities will affect its fortunes. The more important story is one of opportunities that never properly materialised and others that were blocked or denied – and by what.
To get an idea of what Aberdeen might have been like by now, hop over to Stavanger in Norway. It has extensive harbour facilities zoned for a variety of shipping and boating, a transport infrastructure maintaining tolerable separation of commercial and commuter traffic locally as well as excellent links with the rest of Norway and far beyond, striking new public buildings and amenities, a wide variety of attractive housing, varied shopping and plenty of local as well as international businesses in evidence. Aside from the neat conservation areas that have benefitted from high quality recent work, much of what you see post-dates the coming of oil.
In the late 1960s, just before the oil came, Stavanger was an area of deep economic depression and social deprivation. Aberdeen wasn’t. Yet it is Aberdeen that is now congested, its centre run-down and haphazard in appearance, much of its once elegant Union Street with its posh shops now given over to bargain outlets. Such is the volume of local demand for the cheapest deals that these businesses can afford eye-watering amounts in rent. The demand reflects serious levels and volumes of real need rather than Aberdonians’ legendary canniness with pennies. (Though the slump in oil prices has taken its toll).
Of course, Norway has its oil fund. The UK doesn’t. The Norwegians have preserved much of the capital yet have managed to transform their country’s infrastructure and public amenities with the interest on the invested fraction of the fund. Britain attempted nothing remotely like that. Granted that UK oil revenues, huge as they have been, amounted to a much smaller proportion of the UK cake and needs than was correspondingly the case in Norway, no Norwegian-scale transformation could be expected: not perhaps for the UK as a whole, at any rate. Nonetheless, the differences between UK and Norwegian uses of those monies remain glaring. Not least in Aberdeen.
However we might quantify it, and argue over the amount and rationales, the dispersal of those revenues elsewhere counts as the opportunity that never properly materialised. Money sped south faster than the oil in the pipeline from St Fergus. Proportionately little has filtered back to Aberdeen and the north-east to help city and shire pay the infrastructural and other costs of accommodating the oil industry, plan comprehensively and effectively – or leverage opportunities for economic development and diversification against the days when oil-related activities would begin to tail off. That shrewd oil-industry insider, Sir Ian Wood, reckons that this can yet be a tail end decades long with lots of value still to be wrung from it. But no one doubts that we are into that phase.
That’s the context and perspective that makes sense of the groans that greeted the latest promises of support from the UK and Scottish governments. Almost falling over each other to show willing to help out in the downturn, David Cameron and Nicola Sturgeon made pledges in mid-January of £125 million from each government with a further £254 from the Scottish Government, though the latter appears to include some aid announced earlier: £504 million in all. An “extraordinarily small amount”, commented Labour MSP Lewis Macdonald, comparing it with £1.13 billion he said had been allocated to the Glasgow area in 2014. North-east councillors and MSPs had been after contributions that might generate £2.9 billion. Here, instead, was mud in their eye yet again.
All along, the opportunities for Aberdeen and the north-east to plan and respond effectively to phases of the oil era – from boom to tail end – have been blocked or denied by a combination of four factors. The first is a cast of mind to which the SNP is as prone as Labour (or Tories and Liberals, to the extent that matters). This amounts to an apparently irrepressible urge to control and determine all policies from the centre. Up here, many Scottish politicians are often accused of favouring the central belt, especially the Glasgow area: an accusation that is sometimes but not necessarily always or wholly fair. It is Centralism rather than Central-beltism that is the killer problem because it chokes initiative and creates ill-fitting results.
The second factor is the failure of all parties to get to grips with the acknowledged fact that local government finance is a wreck and something needs to be done so that local authorities can have more money they can call their own to use effectively. Thirdly, local authority structures as well as lack of effective powers present obstacles, particularly in the north-east where, by common consent, the older Grampian Region set-up (gone as of 1996) suited many purposes. Aberdeen has lost citizenry and other sources of revenue to Aberdeenshire. Fourthly, Scotland has planning procedures set to the tempo Slow, Slow, Stop-Stop, Slow. The most brilliant, determined and assertive local political and business leadership and citizenry in the world would not have been able to counter those defects in our political culture and system: not on their own, at all events.
The results are all too plain to see. City-centre malls, hotel and office developments have popped up piece-meal all over the place, some blocking once useful old arteries. Newer peripheral commercial estates strain a road system that hasn’t kept pace. There have been bits of road improvement regionally, leaving much longer twisty and dangerous stretches: notably on the main road between those two major economic hubs, Aberdeen and Inverness. Only now are works in hand on the western bypass, four decades after it was first needed. Only now, equally belated, are there serious prospects of a harbour extension. Ditto the much needed airport makeover just announced. Ditto the recently crafted comprehensive city-centre plan. As the tail end of the oil era takes effect along with austerity cuts in public expenditure, that plan may not be wholly realisable.
There are also by now serious housing shortages. These, of course, keep house and land prices on the up even in a phase of relative economic decllne, putting both ownership and rent in the private sector further beyond the reach of many on somewhat above, let alone somewhat below, average incomes. Local average income, contrary to myth, is not far off Scottish and UK averages. This is not a city with widespread high levels of affluence. It is a city with three conspicuously wealthy outer suburbs and otherwise patches and levels of modest affluence and deprivation not far off par for many British cities.
A recent long conversation with a prominent figure on Aberdeen City Council yielded a creditably non-partisan account of many of these problems – and in particular this illuminating remark. “Aberdeen is more like an American city than a British city. It has been given minimal government support and has been expected to make its own way.” Yes: but without the powers and means to do so.
It is not occasional dollops of dole that will enable Aberdeen, with its now ample technological and business expertise, to make the transition from the oil era to a bright enough future. To make the most of Aberdeen’s opportunities now, only wide-ranging reforms of Scotland’s political culture and system can do the business.