European Investment Bank - SPRUCE evaluation: final report

5. Conclusions and recommendations

SPRUCE has successfully contributed to the economic growth strategy in Scotland. It has delivered a number of significant benefits to the Scottish economy at a very difficult time, including through the Global Covid Pandemic. It demonstrates significant additional value compared to traditional grant or other funding interventions and offers considerable potential to deliver impacts of scale across Scotland as part of a long-term strategic plan.

The brief set out three key issues to be considered in the Final evaluation of SPRUCE. These included the relevance, effectiveness, and efficiency of SPRUCE.

In terms of relevance:

• We found SPRUCE and its objectives to be consistent with the underlying policies and market needs. Based on the structured interviews the future demand for similar funding is strong and the view is that the market is no better now, in many respects, than in 2011 when SPRUCE was launched ;

In terms of effectiveness we found:

• SPRUCE has been successful in supporting the economic growth strategy of the Scottish Government at a very challenging time. Over £135M was invested in 16 urban development and 2 energy efficiency projects by November 2021, supporting over £0.5BN gross development activity.

The projects funded by SPRUCE delivered a range of social, economic and environmental benefits in Scotland (including land remediation, business space, jobs, carbon savings and some additional community benefits) which would not have occurred in that timeframe or in those priority areas had SPRUCE funding not been available. The financial leverage was strong and used successfully to move forward solid commercial propositions where there was historic market failure in terms of access to capital.

As also concluded in the interim evaluation, more development work is required to bring forward opportunities to apply the investment led approach which is a distinguishing feature of SPRUCE in more deprived areas (beyond Scotland's City Centres) and where there is wider socioeconomic and market failure.

In terms of efficiency we found:

• SPRUCE offers considerable value for money to the public purse where compared against alternative funding interventions. SPRUCE achieved strong leverage and based on the options examined represents the most economically advantageous option for achieving a set of desired impacts compared to other funding options in the short, medium and long term;

Overall the evaluation demonstrates SPRUCE offers considerable value for money to the public purse and that it has delivered both increased and accelerated economic outputs.

The evaluation has also highlighted that SPRUCE has broad application and the potential to unlock significant value across Scotland over and above what traditional grant funding can deliver. The additional value created by SPRUCE is powered by the combination of the investment led approach and the recycling of funds. Both the investment led approach and the recycling aspects improve VFM for the public pound in their own right, but value is optimised when they are combined and this is the distinguishing feature of SPRUCE.

At a time when the public finances are constrained and each pound available must deliver more, the evaluation suggests that SPRUCE or a similarly constructed type fund merits further serious consideration by the Scottish Government.