Mairi Spowage: Scotland's Cities, Housing, and the New Urban Economy

We've seen the Edinburgh fee are real strength and financial services, but with that it's come many challenges and things like housing, the affordability of housing is a big issue, particularly in Edinburgh issues around over tourism. Now it's great that Edinburgh is such a draw internationally for tourists and has transformed itself into a real cultural centre, but it does form challenges for local residents and next summer they're introducing a tourist tax to try and deal with some of the negative consequences of over tourism. Welcome to the Century of Cities, where urban futures are revealed. Join us as we explore the anthropological shift from post-industrial towns and rural villages to the meteoric rise of mega cities and urban regions. From 1980 to 2018, our urban population multiplies, and we're changing our world forever. We're diving deep with 100 experts and visionaries, tackling the challenges of urbanisation head-on, from inequality and sustainability to urban recovery and metropolitan futures. This century is all about people embracing and adapting to cities. Let's discover how to make that work. Welcome to the Century of Cities, Greg and I are delighted to have Mari Spouge, who is recording from Glasgow, join us. Mari is the director of the Frazier of a Land or Institute at the University of Strathclyde, and one of Scotland's leading experts on economic policy, modeling and data analysis. She advises governments, parliaments and global organisations on economic strategy, labour markets and fiscal policy. Our respected voice in public debate, Ari also lectures in applied economics and is widely recognised for her leadership in evidence-based policy-making. Today, we'll discuss how 1980, 2080 and present-day will differ for cities and will investigate how Mari interprets this 100-year change. Looking back to 1980, how do you view where our cities were then and what were some of the needs and challenges at that time? Scottish cities in the 1980s, many parts of the developed world were in the grip of industrial decline. This is particularly thinking about cities like Glasgow and Edinburgh, think about Glasgow with its large shipbuilding industry, which was in decline and rates of unemployment in Glasgow went as high as around the quarter of people unemployed. Really big economic transition challenges that were happening in the cities and the central belt at the same time, actually, as a city like Aberdeen in the northeast of Scotland was booming with the oil industry, oil first being discovered and really extracted in the 60s and 70s, but really caused that city to be very prosperous and really be thriving in the 1980s. Like many countries, I'm sure the experience of Scottish cities in the 1980s was quite diverse, but certainly the big cities in Scotland were really suffering from the industrial decline that was coming across Britain as a whole. Thank you for sharing the 1980s with us. Now as you look at present day, what progress has been made and what challenges are we seeing at this time? Yeah, it's an interesting one because back in the 80s, local government was very much organised on a regional basis more or less around the big cities. And it feels like today that many of the cities are getting back to this idea of how to manage their areas on more of a regional basis, much more partnerships between different parts of local government to think about economic development and that much wider geographic scale. But really, as emerging from the pandemic, Scottish cities are dealing with many challenges come into lots of cities. Compared to the 1980s, they are much more service-dominated economies and much more tourism, service-based sectors. We've seen Edinburgh, for example, be a real strength and financial services, very different economies from the 1980s, much more service-based. But with that, there's come many challenges and things like housing, for example. There's a massive challenge now in Scottish cities. The affordability of housing is a big issue, but also particularly in Edinburgh issues around overtourism. Now, it's great that Edinburgh is such a great draw internationally for tourists and has transformed itself into a real cultural centre. But it does form challenges for local residents and so on. And next summer, they're introducing, for example, a tourist tax to try and deal with some of the negative consequences of overtourism. Lots of challenges in cities. You get particular pockets of challenge in different cities, depending on the particular mix of the economy. Thank you for your thoughts. Now as we look towards the future, when you think of 2080, what are some of your hopes and fears for that time? I think it is likely that we will be seeing more mixed-use and city centres. There are lots of aspirations on things like 15 or 20-minute neighbourhoods where you can walk to get all of you need within a particular locale, and much more pedestrianised, fewer cars, this sort of thing. And we've certainly seen that trend over the past 50 or so years in city centres that there's much more use of public transport and much less use of cars. So perhaps more compact, better-served city centres with more mixed-use. Perhaps we'll see more automated services, more internet things, people interacting with services in a different way within cities. But really it's likely that many of the trends that we've seen over the last 50 years will continue in the way that we use our city centres will need to adapt to that. Mary, it's really wonderful to have you here on the show. And when you were talking about Edinburgh earlier, you mentioned that one of the solutions that they're introducing to this perceived overtourism is to introduce a tourist tax. Usually this is charged, of course, on a hotel night or something like that. There are other ways of doing it. In general, are you in favour of that way of dealing with overtourism are you trying to suppress demand or are there other ways of doing it that you're in favour of? But very much depends on the city. And we can see this through the academic studies on this where you're looking at different areas of the world and the extent to which there is ability to increase capacity or improve transport or add additional beds in order to accommodate a certain number of tourists. Or you want to suppress demand a little bit by charging a tourist tax. As we know, you tax and then you get a little bit less of it, in general. It depends on the tax, of course, which also has the ability to raise revenue to further invest in those facilities and so on. It can be a way to suppress demand. And when one travels, places like Florence or something like that, we're all used to paying these tourist taxis in order to contribute based on how much we pay or our per night basis. But it will be interesting to see how it impacts on the numbers, visiting Edinburgh next summer. Of course, what we generally find from studies is the extent to which it actually impacts when visitor numbers depends on the uniqueness of a venue. The uniqueness of a place that people go to. And if something wears very unique, they'll tend to pay more and they'll just go anyway. I suspect that Edinburgh might well be in that category. Being as it is so unique with the setting and the festival and all those sorts of things. But I suppose the council is hoping that it will be a sort of revenue generator to allow them to invest more in the facilities. I think local residents will certainly be hoping that they see a positive benefit from this. And I think we want to see the fruits of that investment, to be honest, because it can be quite hard living in Edinburgh during festival times if you're a resident. I'm very aware of your work as the lead author of the Scottish City's Outlook. And I know that the Fraser of Allander Institute has been leading that work for some time now. Tell us a little bit about what the Scottish City's Outlook is. Absolutely. This was a piece of research that we've done in partnership with the Scottish City's Alliance, which represents the local authorities that contain the eight Scottish City's. And one of the things about the eight Scottish City's are that they are very diverse and different from each other, as well as having some things in common, which are challenges for all of them. The purpose of this research is really to assess the role of Scotland's cities as the sort of economic engine of Scotland. We can see from the report it's the majority of Scotland's economic output, as we'd be expected. And also is the home of a lot of its knowledge base in terms of things like universities, where you're going to get a glomeration effects, that clustering, which can really drive innovation and economic growth. And what we want to do as part of this research was really highlight those areas of excellence, where the local authorities were working with businesses or knowledge base partners within the cities to advance local economic priorities. And that's in the areas around things like AI and digital services, but also in terms of the energy, transition and financial services. So what we've seen in the report are some of the challenges that cities are facing, both when they're different. from each other and also when they are more common to try and allow cities as a whole to talk to Scottish and UK governments about when thinking about cities policy, to what extent Scottish cities can be a part of the economic solution for what we all want to see in the UK, which is of course a better economic growth. Absolutely right. When I read the report, I thought what comes out here is that all the Scottish cities have a housing challenge but they've got slightly different versions of the challenge or different kinds of housing challenges in different kinds of cities. So would it be fair to say that Glasgow and Edinburgh and Dundee and Aberdeen and all of the others have the same housing challenge or are there some subtle differences between them? And what is it that makes this problem so difficult to resolve? What makes it so complex? I would say that the have all shifted as part of the same trend and then the underlying economic problem is a lack of supply of housing, of suitable housing but it is manifesting itself in slightly different ways. A huge part of Edinburgh's housing challenge can be seen about the use of a lot of housing in Edinburgh for things like short-term lets, particularly landlords in the past certainly before certain schemes were introduced to earn a lot more money from letting out their flat short-term rather than putting in long-term residents or even letting them go so that somebody who was living that could buy. So that's been remedied by the government by introducing short-term lets legislation across Scotland so that landlords have to register to be able to let things out on that basis and pay fees and make sure it's up to the standard of kind of hotel accommodation and these sorts of things. And there's been policy intervention to try and deal with that and also in Edinburgh and actually some parts of the Highlands you now need planning permission to be able to let your house out like that. So as council have been able to introduce controls on so essentially if they don't want things to be let out in that way in a particular area, landlords can't do it. That certainly has changed the use of some properties so that well we would hope to relieve one of the pressures on particularly the Edinburgh housing situation. The demand generally can be for some smaller properties for people who want to down size. It can be for houses for large families when people are looking to up size in the council or affordable housing sphere and just quite often the houses of the right size aren't in the right place or there's not enough of the houses of the right size. We can often be building housing stock which actually isn't necessarily aligned with the needs we have in particular areas. One of the other challenges is about the UK-wide the kind of asylum policy. There has been a lot of people in the asylum system who have been assigned particularly to Glasgow and this city council then have responsibility to find housing for those people. That's been a well covered issue in the UK over the last couple of years but there's no doubt that the backlogs in that system and the sheer numbers of people who are being processed as put pressure on particular areas of Scotland. Generally if you look at the Scottish population over the last 20 years we have seen a shift from rural areas to urban areas and we have also seen a shift from west to east and so the places in Scotland that are growing the most quickly are Edinburgh and it's surrounding areas like the Lothian, Svetlothian, East Lothian and Midlothian. That puts pressure on particular areas while perhaps other areas are more worried about losing population particularly rural areas and you have this kind of paradox where those rural areas are losing young people. Perhaps their houses in the area are being bought up a second homes for people with more money or maybe folk are retiring to them but they can be losing local young people because they can't afford houses there or want to move for job opportunities. They to a certain extent it was ever less. We can see that those disparities in the kind of age and populations of particularly rural areas and island communities was accelerating that change. So some of these demographic shifts in Scotland also put particular pressure on particular areas and that's why we're talking about the housing problem. We do need to think of it in that very regional local basis rather than looking at the Scottish aggregate because the pressures are different in different areas of Scotland and for different reasons. Mary thank you so much. You've made that very clear. You said on the one hand there's an issue about housing use and housing abuse if you like what's happening to the existing stock. Then you said something about the new supply both in terms of the quantity of it but also the specification of it and how it matches with highly diverse kinds of demand. And then you said something also about unfanded mandates that come for example through the asylum system where local governments become responsible for housing people but don't necessarily have resources to do it. And there are a whole load of kind of economic and human geography issues from the changing geographies of growth to the demographic consequences of that and the larger patterns that emerge. Is it your point that yes a national housing framework or strategy may be necessary but actual local and regional specificities going to be very important in all of this as well? Yeah absolutely because if you talk to people who work in the real estate or house building sectors in Scotland there can be quite a lot of frustrations even with local planners that they work through local authorities about the sorts of things that will be approved and things that won't be approved and the priorities of particular local authority planning. It is important that kind of local and regional lens is put on any national housing strategy because in the end the Scottish government can set out a strategy but like many things in Scotland the people who actually have to deliver it as local government they have to be given their place to both shape that strategy because in the end they're the people who are going to have to deliver it and make those decisions at a planning level if we're going to deal with this kind of national problem collectively then they need to be given their place at the table when we're actually planning out how this is going to work. This is a bit of an issue in Scotland more generally this kind of policy implementation gap where you know a national strategy or vision is set out but there's a bit of a disconnect then with sometimes the resources or the agency that's given to local delivery partners to actually make it happen. You've talked about the possibility of more people living in the city centres but should we just stand back from that and say what does the outlook reveal about what's really happening in the city centres of Scotland. Are all the city centres experiencing the same challenges marry or are they experiencing different ones or different degrees? How do you say it? The challenge faced by in the city centres can be quite dependent on the mix of occupations and the types of businesses that they had in particular areas of the cities. What we're seeing is particularly since 2022 when for example higher education was back more normally in terms of students being in classes all the time. That's made a real difference to those areas of the cities that really depend on that buzz and the campuses around city centre colleges and universities and I can see the the growth again in those businesses that thrive off of that the eateries and the other shops that really depend on that kind of footfall. What we're seeing less of is those sorts of supply chain businesses thriving around areas of cities that are more densely packed with office buildings and there's lots of bits of glass going Edinburgh that we'd fall more into that category and the supply chain businesses around that have definitely struggled more to come back from that because people just are not in the office as much as they used to be before Covid and the busy estate now for trainees for ScotRail use is on Saturday. Which is interesting so maybe it's more of a leisure use than a commuting use. Many businesses are now back at things like three days a week in the office maybe two more communists three across the Scottish economy for those people who are able to work at home of course but when we're talking about many professions that are in city centres these do tend to be more dominated by those sorts of professions where they're likely to be able to work at home if the employer allows. So we are definitely seeing a much different rhythm within the city centre Monday to Friday than we would have done before Covid where it did two ends of the week are much quieter than the middle of the week. Mary, do you think that is now a settled pattern? Do you think we're permanently into a three day a week in the office norm for Scottish workers in sort of service and knowledge industries in Scottish city centres and if so what's the future for Scottish city centres then if that is a permanent new pattern? It's really interesting because you can still see some businesses trying to push towards this three day and actually some of the employers who are furthest away from that are actually public sector employers like the Scottish Government even which has been much less willing to dictate how many days people are to be in the office councils and so on as well. Some businesses are still working up to that kind of three day a week but it does feel in those industries for which it's possible for workers to do that it has become the expectation of workers that this will be offered. and that obviously it's personal choice, but it is a bit of an expectation on the flexibility that will be allowed to workers. So it almost feels to me like it's now something that people will ask for or insist upon as they're moving jobs and they will have an expectation that that will be there. It does feel like it's getting towards a settled position to be honest, that this is the way that sectors like mine or financial services and so on will work. What that means for city centres, we can see just now that a part of Glasgow that were like retail hot spots buzzing at city centre areas had been in long term declined due to online shopping and so on and then Covid hit and it accelerated a lot of these issues, but that's been exacerbated by fewer workers in across the week as well. So it's hard to know what it means for city centres, but they will adapt and I'll set you like Glasgow is always adapted to changing economic circumstances. Another big theme of the Scottish cities outlook is really highlighting that Scottish cities have got this deep history and legacy with discovery, design, innovation, technology, engineering. They've really been cities that have led on those sorts of agendas over almost a couple of hundred years and we're in a new cycle with the innovation economy and the frontiers of technology. Which of Scotland's cities at the moment are best placed to lead in this space and do they all have something to offer and can they all succeed? Are there going to be concentrated in one or two? I think the important thing is that they don't all chase the same sectors and focus on the strengths that they have. We have two really large and powerful universities in Scotland, Edinburgh and Glasgow, have the most cash and the largest pools for research. But we also have universities in Scotland which are focused on very much in particular areas. So Strathclyne, my own university, it has huge strengths in engineering and supporting advanced manufacturing and development of medicines. We've got a Dundee in the drug discovery unit at Dundee, which has massive strengths in developing drugs and attracts quite a lot of international investment into the research that they do there, which has generally seen as world-leaving. The universities and knowledge bases in Aberdeen, which are supporting a lot of the innovations around the net zero transition and all of the innovations in FinTech, N.A.I, and Edinburgh. There are huge strengths. There are lots of strengths in some of the smaller cities in Scotland on particular aspects of this. The developments that's still in council have pushed forward in E.I.I. and Sterling, the sort of hub that's growing up in Inverness around Cromorty First and the development of the offshore energy economy up there. It will be important that they play to their strengths and they focus on probably a couple of things and not trying to be all things. There are huge opportunities even in things like space. We make a lot of satellites in Scotland and that's also around Glasgow. A lot of it does come back to our highly educated population, our ability to attract the best and the brightest from around the world to engage in research. And then those links with the local council, local businesses and so on, who very much recognise that these sort of knowledge bases are key anchor institutions in a local area. We all can collaborate to ensure that the best economic outcomes are achieved for the area. Thank you very much, Mary. In a way, you're saying something that I firmly believe as well, that the Scottish cities have between them the combination of different skills and expertise and orientations to actually be a really formidable innovation economy for Scottish cities to really lead in these different specialised frontiers of innovation. Actually, they may not have the talent that they need to do it. I think it's a huge challenge. And what we should ask when politicians say there's a huge opportunity in this new industry that we're building and say in hydrogen or carbon capture when it's going to generate all of these jobs. For me, that's not the right thing to say because the problem is, okay, there might be all of these jobs, but who's going to fill all these jobs? That's the limiter here. It's not the production of the jobs. It's as having the people with the right skills to be able to fill them. And we can see that in the mix of different priorities that are being pursued at the moment, say, within Scotland. So you've got a lot of pressure from policy makers to build more housing. We've got a huge increase in defence spending, which is generating a lot of demand for particular types of workers. We've got the energy transition, which is about trying to attract workers to assemble turbines that need to go out into the sea. Lots of these jobs are actually bits of construction engineering. But the trouble is all of these different things are chasing the same small-ish pool of workers, which makes me concerned that we're not going to build more things, which we're all trying to do at the same time in all of these different areas of the economy. Well, just build the same amount of more expensive things as we're chasing these workers around. Particularly a shortage of things like welders, for example. So these sorts of workers really, we need to think about how we domestically produce them. To what extent are we offering enough apprenticeships? To what extent do colleges in Scotland have the ability to support those apprenticeships to make sure that they have the right knowledge base to go alongside the industrial base? So these are challenges that the Scottish Government is in charge of, it is a devolved issue. We can't grasp the opportunity of things like the energy transition without an investment and a pipeline of things like apprentices. And if you think about demographic change and the desire and the requirement for more social care workers in the future, at the moment we're not offering enough places to train all the people who want to become social care workers at colleges in Scotland. So there's a bit of a disconnect there between what we're probably going to need in terms of our future economy. And what politicians are willing to kind of plan to put in place. The other part of it, of course, is policy certainty for investors. Construction companies, for example, are actually ready and willing to invest in the pipeline of apprentices. If only they knew that there's a good pipeline of work, can they have that kind of certainty of the pipeline of the future? There's so many interesting things you've said there, Marry. You've made the point that if you want the innovation economy to flourish in Scottish cities, you've got to have what's often called the mid-tech and vocational skills available to actually support the whole supply chain or value chain, the ecosystem. The cluster is going to need people who are able to do all of those medium technology jobs if the high tech jobs are going to stay. Now, a big issue that comes out in the Outlook report is that the climate transition, which, of course, is occasionally spoken about as a kind of a cost, is actually a huge opportunity for Scotland and its cities. What does the opportunity look like and what do you think is needed to really unlock it? We do have a huge economic opportunity, given the natural resources that Scotland enjoys. Huge coastline, huge and mature oil and gas basin, which has the ability to transition into a Norse energy basin with a floating offshore wind, replacing oil and gas in time. We have the natural resources to be able to really exploit this and generate far more power than we'll ever need as long as we can get the infrastructure right. That's one of the real limiters, which is, while we're generating all of this power of the coast, we need to find a way to get it to the people who need it. So the real challenge with a lot of these developments is waiting for suitable grid connections for the grid in the UK to be upgraded so it can take the power from these fairly rural places in the UK to the centres of population who need to buy it and use it. Other challenges are, of course, around the renewable nature of these power sources, an intermittent nature of them. How do we develop and have suitable battery storage, for example, to be able to store electricity when we can use it all? These are all different infrastructure problems that we need to solve, and which requires a lot of investment. They've not scaled up to the point at which they're profitable. The oil and gas sector, especially given the sort of tax regime at the moment, is declining way faster than expected and the investments falling off a cliff there, so they're really struggling. And before they were able to kind of subsidise, they're renewables bit with the profitability of the oil and gas part of their business, but that's just drying up. So what we're finding is a lot of businesses are reorientating their work to other jurisdictions where the investment environment's more favourable and they're more able to charge a head and see a good return on investment, which is after all what investors require to be able to invest. I'm quite worried at the moment that we're sleepwalking into missing the opportunity, particularly when the UK government is talking about clean power 2030. That's in five minutes, really. If you're a investor, if you're a investor, if you're a investor, soon and we need to be doing so much now to really be able to get anywhere near that. And it's not just about the need to decarbonise our power system. Eventually we will do that. It's what sort of supply chain businesses, what sort of economic opportunity will be left generating economic activity in Scotland. Because you don't need to know Aberdeen and it surrounds very well to see what's happened to the city over the last 10 years since oil price shock. The impact that a downturn in the industry has had on supply chains and on all that induced spending and hotels and restaurants. And you can feel it when you're there that there has been that huge downturn and it has an impact on the whole city. So it is a worry. Oil and gas jobs were never going to be replaced for the same jobs. It was always going to be a different profile. It was also going to be more geographically spread than just in Aberdeen. But the worry is at the moment that the investment in oil and gas is just spiraling down so quickly that we're going to have a very limited supply chain life to take the economic opportunity. Seems to me that you're describing some really nuanced kind of conditionality here around the climate opportunity and the transition risk actually and what that looks like, particularly in an environment where you're shedding jobs out of an incumbent industry. And you're talking about the transition opportunity in the new renewables side. But you're talking about all of those classic challenges of scaling up investing sufficiently sequencing a supply chain and all of the timing and sequencing uncertainties that go with that. That's a challenge. But if we look forward to 2035, if Scottish cities are going to take the chances that they have to contribute even more to the Scottish economy, what's the opportunity for them? That's a great question. One of the things that struck me in working with the administrations who oversee these cities is the kind of regional convening power they had to bring people together to solve problems for their local area. Not just in the city centre local authority, but the wider what we call economic conversation, bringing together those leaders in business, the further and higher education leaders, all of the main big players in the economic development and the sort of outcomes of the city and bring them together to think about what are the economic priorities and how can we all help to make it happen. A good example would be the one Aberdeen project where they did that and they brought everybody together. Some of that is born out of the challenge that somewhere like Aberdeen and Aberdeen shares faces with these challenges that we've talked about. But I think that is the way that together they can make a difference and ensure that everyone in the local areas orientated in the same direction. And hopefully through that they can raise their voice more to the Scottish Government because I think there is a bit of a centralisation and Edinburgh problem that we've seen over 25 years of devolution. These sort of regional powers can maybe exert more influence because as you've seen there are lots of examples in Glasgow as well. Glasgow City Innovation District where that partnership between the knowledge base, business and local administrations can really make that difference. Thank you for joining us on the Century of Cities. For more episodes you can find us on iTunes, Spotify or wherever you get your podcasts. Please join us next time and give us a review or send us a message.