The other festival - Aberdeen International Youth Festival

It's long been overshadowed as a festival city, but things are finally looking up in Aberdeen, writes SUSAN MANSFIELD

IN ONE OF SCOTLAND'S BIG CITIES, a festival is just beginning. Performers and pamphleteers mingle in the streets with bemused locals who scratch their heads and say "Is it this time of year again?" Theatres large and small prepare for shows, from eager young theatre companies to glitzy international concerts. Welcome to … Aberdeen.

Every year, the Aberdeen International Youth Festival (AIYF) coincides with the start of the Edinburgh Fringe. As a result, a major festival in a Scottish city featuring some 80 events and 700 participants tends to slip under the radar.

"I didn't know about this festival until I got the job," admits Stuart Aitken, the new director of AIYF. "That's appalling. The quality of the international work here would sit comfortably on the stage at the Edinburgh International Festival. It's only because it happens at the same time as the Fringe that it tends to be overlooked."

AIYF is one of Scotland's oldest arts festivals, now in its 36th year. Beginning as a festival of youth orchestras, it has extended its programme to embrace drama and dance, always attracting a colourful mix of international companies. The current programme includes orchestras from Switzerland and Hong Kong, dancers from Belgium, Georgia and China, Scottish Youth Theatre and the acclaimed Youth Music Theatre: UK.

Aitken is planning a number of changes this year. The Lemon Tree will become a festival hub, with late concerts every night. Tomorrow will be Festival in the City – an event "a bit like Fringe Sunday" – which will see many of the participants appearing on seven stages around the city centre.

He believes the way forward is to maintain the festival's world-class core while encouraging participation at all levels. "I'd like it to get to the stage that restaurants are doing festival dinners, and other venues, like churches who have youth projects, could choose to do something at the same time of year, like a Fringe."

It'll take more than ten days at the beginning to August to grow the cultural life of a city, and Aberdeen's record in the arts is patchy at best. It is better known for those who have left – Evelyn Glennie, Annie Lennox, Michael Clark – than for supporting new work on home turf. The cultural renaissance which touched Dundee a decade ago passed it by.

Aitken, though, believes there's a lot going on, and that one encouraging sign is a willingness on the part of the city's cultural organisations to work together. "If you're going to develop arts and culture in whatever field, you have to take risks. What we can do working together is support each other in taking risks."

For the first time, Aberdeen's biggest theatre, His Majesty's (HMT), which reopened in 2005 after a major refurbishment – is producing work of its own. The National Theatre of Scotland's touring version of Tutti Frutti was created here. In the autumn, the theatre will launch its first solo production, a version of Lewis Grassic Gibbon's Sunset Song.

The arts in Aberdeen took a blow earlier this year after the Lemon Tree, the city's major small-scale venue, went into liquidation. However, it was reopened a few months later within the stable of Performing Arts Aberdeen, which runs HMT and the city's other main performance space, the Music Hall.

Everyone I've spoken to agrees Aberdeen has a strong music scene. The Sound Festival, Scotland's only festival dedicated to new music, in which Aberdeen University is a key player, takes place in October and November, and was awarded flexible funding status by the Scottish Arts Council earlier this year.

"Aberdeen has a good cultural life and a wonderful music scene, but it's all a bit underground," says Lindsay Gordon, the director of Peacock Visual Arts, the city's major contemporary art organisation. "It lacks a focus, somewhere which is highly visible, which is proof that there is a really fabulous creative cultural scene in the city."

He hopes he has the solution. Earlier this year, Peacock was granted 4 million from the Scottish Arts Council toward a major new centre for contemporary arts in Aberdeen. The 12.5m Northern Light project, which will transform Union Terrace Gardens in the heart of the city, may be Aberdeen's most ambitious cultural project to date.

"Right from the start, we wanted to be ambitious," says Gordon, a former head of visual arts at the Scottish Arts Council, who took over Peacock ten years ago. "We wanted a new building, a stunning piece of architecture, something really special. It will be a major centre for contemporary arts – visual arts, moving image and dance – with a strong schools connection and a strong participation element."

Peacock Visual Arts was founded in the 1970s as a print-makers workshop and is still one of the leading such facilities in Scotland. Artists who have made work there recently range from Barbara Rae to Rosalind Nashashibi, Dalziel + Scullion to Kenny Hunter.

As well as a new home for Peacock, Northern Light it will house City Moves, Aberdeen's leading dance organisation, the City Council's Arts Development and Arts Education teams, plus a cafe-bar and restaurant. "It won't just be about big schmaltzy art exhibitions," says Gordon. "It's about participation. You don't just come and see. You come and see and do."

It is hoped that work will begin next summer on the elegant and widely praised design by London-based Brisac Gonzalez. But the key is investment. Aberdeen City Council has pledged 3m towards the project, Scottish Enterprise a further 2m, but the City Council is currently facing grievous financial difficulties. Both Aitken and Gordon mention that Aberdeen is habitually granted lower levels of Government support than other cities because it is perceived to be "economically buoyant".

But there is widespread agreement that Northern Light could provide a valuable lynchpin in the infrastructure needed for creative people to live and work in the city. At the moment one of Aberdeen's biggest challenges is how to stem the "creative brain drain". Peacock says it has already received applications from art students asking for jobs in the new building – even though it won't open until 2011.

• The Aberdeen International Youth Festival runs until 9 August. For more information, visit www.aiyf.org

Four shows not to miss at the other festival

KY8, Lemon Tree, 3 August

Kinetic Youth Theatre, a team of young performers from the Buckhaven area, take the audience on a journey through "the most-feared postcode in Fife", in a show which combines live performance, film and animation.

The Silver Bough, Aberdeen Grammar School, 3 and 4 August

Gerard McBurney, composer for Theatre de Complicite, joins forces with playwright Iain Finlay Macleod and the formidable talent of Youth Music Theatre:UK to stage this new musical based on Scottish myths and folklore.

Benjamin Britten's The Little Sweep, Beach Ballroom, 8-9 August (also at Haddo House, 6-7 August)

Every year, local musicians join forces with the Royal Scottish Academy of Music and Drama to create an opera especially for AIYF. Britten's tale of a young boy sold into service as a chimney sweep and rescued by the children of the big house is suitable for all the family.

AIYF International Dance Gala, His Majesty's Theatre, 7 August

The highlights of the dance section of the programme brought together in one glorious evening: Aike Raes and Cie Ph/f/ase from Belgium, Georgia Dance Theatre Legacy, Shenzhen City Dance Team from China, plus the best young dancers from the AIYF dance school.