ESIF Programme Monitoring Committee future funding update paper: May 2021

UK Budget March 2021

There was no update in the March Budget on the UK Shared Prosperity Fund (UKSPF) - development of the fund will continue over the summer of 2021 and roll out will begin in April 2022.

However, the UK Government announced three new funds:

• the Community Renewal Fund: £220m one year precursor to the UKSPF, 90% revenue, run competitively through local authorities
• the Levelling Up Fund: £4.8bn four year capital fund aimed at regeneration and transport projects again run competitively through the local authorities
• the Community Ownership Fund: £150m fund aimed at supporting community groups to buy community assets such as pubs an sports pitches

UK Government engagement with UK officials and Scottish expectations

Scottish officials have engaged on a regular basis with Ministry of Housing, Communities and Local Government (MHCLG) policy leads for over a year.

Scottish Government officials and Ministers continue to stress to the UK Government that we expect to be treated as a full and equal partner in the development of the UKSPF and that Scotland’s share of the funding must be fully devolved so that we can target it in a manner that suits the needs of Scotland’s people, communities and businesses.

Scottish plans

In November 2020, the Scottish Government published its plans for Scotland’s allocation of the UKSPF through the development of a Scottish Shared Prosperity Fund.

The plans were developed in partnership with a steering group of experts and based on the results of a consultation exercise carried out in the winter of 2019/20 which allowed 171 unique organisations to put forward their views.

Scotland’s UKSPF share must be devolved to the Scottish Government to ensure that Scotland’s distinct needs are met.

We have always been clear that we expect full replacement of EU funds to ensure no detriment to Scotland’s finances; Scotland must receive at least £1.283 billion for a replacement seven year programme for 2021–2027 funding for investment in devolved areas should be routed through the devolved administrations, in line with devolved competence.

Scottish plans focus on decentralising much of the design, delivery and control of monies to regional economic partnerships which include local authorities and community actors.

It aims to address and reduce economic and social disparity within and between places and people in Scotland and focuses on four key areas: improving and empowering places, reducing poverty, increasing skills, and growing business and jobs. In addition, key horizontal themes of wellbeing and climate change will be developed to ensure Scotland achieves inclusive growth and meets its net-zero targets.

European Territorial Cooperation (ETC)

There is no clarity on how and if ETC will be replaced. We have been told that it will be subsumed by the UKSPF, however, it is unclear whether this means simply the former ETC budget will be included in the Shared Prosperity Fund or if there could be opportunities for international collaboration.

Section 6 of the Internal Market Act includes the provision to give funding for “international educational and training activities and exchanges”. This could potentially allow for the UK to provide funding to partners to participate on a project by project basis in ETC.

Scotland values the opportunities that ETC currently offers and wants to build on these over the next programming period. However, the only 2021-2027 ETC programme that the UK Government has committed to taking part in is PEACE Plus (which covers Ireland and Northern Ireland).

Work on designing the future programmes has already started and the Scottish Government is following these developments closely. We continue to remain committed to working with our European neighbours and building on the successful collaborations we have established with partner countries over successive ETC programming periods.

Next steps

Scottish Government officials and Ministers continue to stress to the UK Government that we require full engagement in the development of the replacement programmes and that Scotland’s share of the funding must be fully devolved.

UK officials from Scotland Office and MHCLG have indicated that devolved administration Ministers and officials will be engaged in the development of both these programmes but we currently have no more detail about this.