Councils cannot rely on government handouts and grants to spark economic growth - they need to work with the private sector, authority leaders have said.

Senior figures from the public and private sectors took part in the Scotsman Leaders Forum, a roundtable event hosted in partnership with Turner & Townsend, to consider the challenges Scottish local authorities face on issues including economic development, housing and infrastructure.

In this, the first part of our series, leaders discuss the barriers to attracting investment, and finding a way to work in partnership.

Paul Lawrence, City of Edinburgh Council chief executive

The biggest problem in the public sector is addressing poverty and inequality - we should always be mindful.

The biggest challenge we face is that everybody sees the crying need for infrastructure investment…but you don’t have to be a genius to know that, whether it’s at local government level, Scottish Government level or UK Government level, nobody’s awash with money.

So you’ve got a crying need for investment in infrastructure to modernise the country, but nobody’s got any money. How are you going to solve that? I think expecting that to be solved with some kind of magic announcement somewhere is perhaps overly optimistic.

Liz McAreavey, Edinburgh Chamber of Commerce chief executive

There was a hope that [the new government] would start building stability and a kind of confidence in the market.

And that’s not gone so well, but there are four more years ahead. There’s time to sort it out, to move on, but a lot of work too. I think for Scotland, there’s an opportunity in terms of offshore wind energy and net zero.

But how do we invest? How do we attract that scale of investment capital in Scotland? There’s a lot that will be based on confidence in a government that can be agile, that can de-risk investment, that can really attract what we need.

Lawrence

We’ve been through rounds of PFI (Private Finance Initiative) and PPP (Public Private Partnership) and so on and so forth. That, to me, is the kind of question which I’m absolutely certain that very, very clever people in the Treasury and Scottish Government and elsewhere are all trying to bend their minds around: how do you effectively meet what sometimes gets called the wall of capital with the need that the public has for infrastructure, the need society has for infrastructure?”

McAreavey

Economic growth is about funding public services and demographics, poverty and climate change. We need to address that kind of public-private genuine partnership to unlock economic growth.

We’ve got some amazing assets in Edinburgh and in Scotland. We’ve got fantastic, innovative education. We’ve got quantum advanced engineering. We’ve got net zero and offshore wind, we’ve got technology. The list goes on and on.

Liz McAreavey, Chief Executive of Edinburgh Chamber of Commerce | LISA FERGUSON

So why does Edinburgh not have five unicorns? We’ve been living off two we’ve had in the last 10 years. Why have we not attracted that investment? And I do think it’s about having a story, telling the story, and having a common ambition…so that the private and public sectors are generally working in partnership.

James Darrie, Director at Turner and Townsend

There’s definitely a barrier there. We’ve got a number of authorities around this table that are in housing emergency, right? And we’ve got a number of developers where we work on feasibility for a buy-to-rent scheme, and there is absolutely appetite.

The challenge is policy constraining that. And you know, whether that’s rental caps, whether that’s whatever is putting a constraint on that investment - 150 miles south, it’s easier to manage.

There’s got to be a realism that, if the private sector is making that investment, then we do that for the social benefit to inequalities that are playing out but they’re investing for a reason.

Lawrence

Take that shopping centre 300 yards from here, that is an example of a public private partnership at work. We worked in partnership with Nuveen to deliver St James Quarter. We worked on it through very turbulent political events, through very turbulent economic headwinds, it was built during a global pandemic - but we used a funding mechanism to get it over the line.

It was a funding mechanism based on uplift of rateable values, but also on other economic criteria - job creation, so on and so forth. I think you would have to adapt that kind of model in different property markets.

The amount of regeneration you can see pretty much from this window is within the billions. That means the mechanism you might put forward for central Edinburgh is not the same as you would use at Scottish Borders or Dundee. I think we need more maturity in designing horses for courses.

Sebastian Burnside, Chief Economist of Natwest Group

The aspect which strikes me most reinforces your point about different pressures on different areas - because the partnership that you mention is a measure which comes clearly across everyone.

I was in Inverness two weeks ago, and the tone of the business that we were talking to in the room was of tremendous excitement. Excitement about things like the freeport and the huge amount of investment offshore, and also terror that they are going to have nowhere to put the people that were supposed to do the job. Housing is one of the things which we keep coming back to again and again and again. That’s a genuine, outright tier one hold back on productivity.

I think Scotland's got, across different contrasting areas, very many good examples of where the prize is potentially very substantial and very helpful for communities. But a lot of people are struggling to see how that's going to happen.

This is the first in a series of articles about the roundtable, which was held at The Balmoral in Edinburgh and chaired by Joshua King, Head of Business at The Scotsman

Exclusive:Scotland’s economic future relies on solving this problem - why nobody has any money

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