Michael Kelly: Playing politics with Games regeneration plans

THERE was always the fear that funding for the vital economic development legacy component of Glasgow's Commonwealth Games in 2014 would be threatened. On these pages last May I pointed out that the effect of the recession on both public-sector finances and the confidence of the private sector had already introduced new degrees of uncertainty.

This week the extent of these problems came to light with the revelation that Scottish Enterprise (SE) has cut its promised contribution to Clyde Gateway - the Urban Regeneration Company (URC) charged with delivering the economic growth, housing and jobs to the East End of the city - by 46 per cent.

This reneging on what Clyde Gateway considers to be a legally binding agreement has caused outrage in Glasgow among both elected members and officials. After fulfilling to the letter the commitments they made they feel that they have been sold down the river.

Clyde Gateway was formed to take on board the lessons that had been learned in Glasgow over previously abortive regeneration schemes, in particular to avoid short-termism. By bringing together Glasgow city council, South Lanarkshire council and SE in a formal company structure the project would be given longevity and funding assurance allowing certainty and momentum to be built.

In setting up this URC in 2007 both councils agreed to contribute their landholdings in the area. The board of SE as owners of one-third of the company agreed to match that with funding of at least 42 million at the rate of 7.5m a year. An aspirational 111m was also mentioned.

The money came with onerous preconditions on the other parties. The M74 had to be completed, a local road network built, pylons removed and cables buried. Scottish Water had to improve sewerage and drainage, the Commonwealth Games had to be secured and proof of business interest provided. All of these regeneration catalysts have been or are being delivered.

Yet, this week SE's funding was cut to 6.8m for next year, to be shared among all six of Scotland's URCs. It has been described as an "act of betrayal" and a "breach of faith" in Glasgow. As recently as last April when public spending cuts were on the cards, SE's business plan ring-fenced the money committed to Glasgow.

What has changed since then has not yet emerged. Clearly converting an overall cut of 12 per cent in SE's budget into halving the money going into regeneration indicates that SE has taken cold feet over the benefits of urban renewal and switched its priorities elsewhere. One suspects that Alex Salmond's irrational commitment to the uncertain benefits of renewable energy and the 70m earmarked for that figures somewhere in the equation.Whatever the explanation, no doubt SE will produce some scientific evidence, spurious or otherwise, for depriving Glasgow of vital funding.

What it cannot dispute is that the private sector interest is there. Aviva has just agreed to invest 10m in an office development in Bridgeton that will bring 500 jobs. The 35m business park being constructed will see major private sector investment. An 8m leisure and shopping complex is on the agenda. And Strathclyde Police will spend 38m on moving its headquarters from the city centre. As a result of these concrete developments and the motorway corridor effect, independent property specialist Rydens has revised upwards by 25 per cent its business development projections for the area.

Robert Crawford, the former head of SE now chairing Clyde Gateway, who has not always been convinced of the economic benefits of urban regeneration, appears converted to the strengths of this project and points out that SE has long recognised that "there would never be a better opportunity to deliver a physical, economic and social transformation which would by its nature create a demand for new homes, industries and commerce".

This is not a plea by one of the usual suspects from Glasgow's Labour mafia. Crawford was prepared to put himself forward as an SNP candidate in last year's general election. So his appointment to Clyde Gateway has political significance. Glasgow must hope that his plea for a reconsideration of this decision will be heeded by his party colleagues.

Labour leader Iain Gray predictably regards this attack on the regeneration programme as unacceptable, an example of exactly the kind of cut that should not be made as the country struggles to recover investment and jobs. While spending commitments are still to be made, after May if the election goes Labour's way it will be a priority to re-examine the position. Given that Gray has previously criticised SE for spending 21m - 10 per cent of its budget - on consultancy fees, and the importance of Glasgow to Labour, there must be some optimism that funds can be found.

There is no public-sector project in Scotland better researched, planned or controlled than Clyde Gateway. Its aims are specific and quantifiable - 21,000 new jobs, 10,000 new homes, the attraction of 20,000 people to the East End of Glasgow and the creation of 600,000 square metres of business space. The public investment is expected to generate ten times its value in private sector response over the 20 years it will take to complete the project.

The decision by the country's economic development agency to pull the plug at this stage can only be political. And pulling the plug was what it really wanted to do. Its intention was to spend nothing further on the East End regeneration. Fortunately, the deprived areas of Glasgow do not have to wait until May to have this act of vandalism corrected. Negotiations over the SNP's proposed budget are reaching the critical stage.If the government will not succumb to the pressure on it, then the parliament should vote that funds be restored. Any prospective MSP not supporting that should not dare show his or her face in the city in May.