EU replacement funding £151 million less in first year

Business Minister Ivan McKee has said the UK Government’s Shared Prosperity Fund fails to deliver promised funding for Scotland following the UK’s exit from the European Union.

New arrangements published today will see £32 million allocated to Scotland for 2022-2023 - £151 million short of the £183 million estimated to be an appropriate replacement for EU Structural Funds.

Since 2016, Ministers have tried to engage constructively with the UK Government to ensure the Shared Prosperity Fund aligned with the Scottish Government’s national aims and ambitions. However, Scottish Ministers have been given no role in deciding how funding is allocated and which projects deliver the maximum benefits. Mr McKee says this undermines the devolution settlement and does not recognise the authority of the Scottish Government in devolved areas.

Commenting on the launch of the Fund, Mr McKee said:

“The UK Government’s Shared Prosperity Fund fails to deliver replacement funding which was promised to Scotland, meaning communities across the country will miss out on around £150 million of investment in 2022-23. This demonstrates exactly why Levelling Up means losing out as Scotland will receive considerably less funding than before Brexit.

“EU funding has supported infrastructure projects and community initiatives across the country since the 1970s, with Scotland receiving and delivering over £6 billion of EU Structural Funds. Transformational projects, such as the University of the Highlands and Islands and the European Marine Energy Centre in Orkney, have brought significant benefits to businesses and communities. It is hugely disappointing that future projects with as much potential may lose out.

“Since 2016 the Scottish Government has tried to engage constructively with the UK Government to ensure this Fund was delivered in a meaningful way, consistent with the devolution settlement and aligned with our national economic aims and ambitions. However, the UK Government has undermined devolution by failing to give the Scottish Government a decision-making role - which ultimately fails to meet the needs of Scotland’s communities.”

Background

The Shared Prosperity Fund will see Scotland allocated £32 million in 2022-2023, £55 million in 2023-24 and £125 million in 2024-25. Even the third year of funding delivers less than Scotland received before the UK’s EU Exit.

The Scottish Government has calculated a sum of £162 million per year would be needed to replace the European Regional Development Fund and European Social Fund, increasing to £183 million per year when LEADER funding and the EU Territorial Cooperation Programmes are added in.