European Structural and Investment Funds: Ministerial statement

Please note political content has been removed.

Last week there were various reports in the media about Scotland’s use of European Structural and Investment funds. These were inaccurate and misleading. My statement today is to clarify the position as it stands now, and I'll make a further statement once the programme has actually closed and the final calculations have been completed and published.

As I said last week in the Chamber, neither I nor the Parliament’s own information centre recognise the figures that have been quoted. And so let me be clear today about the latest position.

The maximum amount allocated to Scotland by the European Commission for European Structural and Investment fund projects is €783.4 million - that's around £669 million.

It's important to remember that the European Commission allocates and pays funding to member states in euros, we then allocate and spend funding on projects in sterling. 

Now 60% of the allocations that the Scottish Government have made have been to local government. The rest were largely to public bodies such as NatureScot, Skills Development Scotland, who delivered excellent green infrastructure and skills training programmes respectively. The burden of implementing, delivering and agreeing the projects lies with our partners.

At every turn we have encouraged our partners to spend their allocations of EU funding and to meet the delivery targets. Unfortunately in some cases projects did contract. For example, the number of participants on structural-funded apprenticeship programmes were impacted by the pandemic in 2020 - the final year of the European Social fund. 

We've also repeatedly asked all our partners to put forward new projects or to expand their existing ones to maximise our use of the funds. Some proposed projects did not meet the European Commission’s strict eligibility criteria.

And here, it's important to note four things.

First of all, the European Commission's requirements are very stringent. They only fit a limited number of projects and they cannot be used for core services. 

Secondly, because it requires match funding it hasn't always been easy, especially for the third sector, to complete the projects. 

And then lastly, because the partners have to commit the funding and then claim a refund from the Scottish Government, it hasn't always been the first source of funding our partners have opted to use. 

So any suggestion that this funding could just have been used for any and all public expenditure, as I've heard in the Chamber and may well hear shortly, just isn’t accurate. The funding cannot relieve pressure on day to day spending – it does not work that way.

Many factors will influence the final outturn position and it's simply misleading to forecast at this point what the final outturn position will be.

And I want to set out three of the biggest influential factors when it comes to the final position.

Firstly, as I said last week, the totality of eligible spending by partners and the total reimbursements we have received back from the European Commission will not be finalised until the second half of 2025, when all the lengthy accounting and auditing procedures are completed. The same is true for all parts of the UK. Indicative forecasts are not final figures. Each programme differs in purpose, scale and the way it is administered. So comparisons with other parts of the UK are spurious.

Secondly, the amount currently committed to projects which were led across the country by our partners, mostly local authorities, is £545.7 million. That expenditure was all incurred prior to December 2023. These valuable projects, some of which I will describe later, have concluded. The final expenditure claims have been submitted to the Government. My officials are currently verifying those claims, against the Commission's extremely stringent eligibility rules, before making the final payment to our partners. 

Only once payments have been made can we claim the reimbursement from the European Commission. We will do in July and in October this year. That process is lengthy. All payments are retrospective.

Thirdly, and perhaps most importantly, the European Commission has recently extended the final date for submitting reimbursement claims and we intend to make use of that - to ensure that absolutely every pound or euro that can be claimed, will be claimed.

Our final reimbursement will now also include a contribution from the European Commission, over and above the figures that I have used, recently made available by the European Commission to all member states, under the new ‘FastCare’ scheme, towards the cost of housing and supporting Ukrainian refugees to Scotland, which the Scottish Government rightly shouldered. 

Once the figures are finalised, I'll be happy to return to Parliament to set out the details.

It's worth noting that previous cycles of this funding occurred on a rolling basis. So we were continuously working with partners to identify projects. The difficulty with this cycle is it's the last one. It's a hard stop.

We are missing out on this current cycle which runs 2021 to 2027, that our European partners are benefiting from to the tune of millions of pounds of euros, because we are no longer part of the European Union. Those millions of euros are focussed very much on renewables and research and development. 

There are some other important clarifications I'd like to make. Our programme partners for European structural funds have always had access to the funding that they've requested, so long as their projects were eligible. We have always paid out claims to our partners that fully met the grant conditions. We did so throughout, at our own risk. Remember this is a retrospective programme. And we've effectively providing millions of pounds of working capital to partners to deliver the projects.

More than 240 projects right across Scotland have been supported through European Structural and Investment funding. Projects have helped tackle poverty, including child poverty. 18 local authorities have used the funds to assist vulnerable people, including parents, with financial and debt management advice, to ensure they are receiving the benefits they are entitled to and securing housing.

Zero Waste Scotland has supported businesses up and down the country with much needed advice and support on how to embed resource efficiency in their processes. For example, not far from here Stewart Brewing were able to benefit from Zero Waste Scotland’s advice thanks to EU funding.

NatureScot’s Green Infrastructure programme has created and enhanced more than 200 hectares of greenspace in urban areas, including 32 hectares of vacant land brought back into use.

In addition, NatureScot’s Natural and Cultural Heritage Fund used European Structural Funds in 13 projects across the Highlands and Islands promoting its outstanding scenery, wildlife and culture. That includes the redevelopment of award-winning Kilmartin museum which reopened its doors last September with expanded exhibition and education space.

The Smart Cities project brought together our eight cities to share data and learning how to adapt our cities for the future. Whether its solar-powered bins in Stirling, intelligent street lighting in Aberdeen or helping to set up the Creative Exchange, a new hub for the arts economy in Perth, that funding has helped to modernise delivery of services to citizens of Scotland.

And as the Member for Skye, Lochaber and Badenoch, I know how crucial this funding has been to the Highlands and Islands. The Rural Veterinary Innovation Centre in Inverness, opened this March by Her Royal Highness The Princess Royal, is a brand new £12.5 million facility developing new links between science and industry to help address planetary health challenges and grow the natural economy.

I am proud of the vast breadth of Scottish projects and programmes that have been supported through European Structural funds. From helping thousands of schoolchildren and young people on apprenticeship programmes to achieve their full potential, to electric vehicle charging points and active travel schemes to help reduce carbon emissions in transport.

I'll be delighted to report to Parliament again in the coming months the final financial outturn figures and outcomes that have been achieved once the programme has formally closed.