Scottish Replacement For EU Structural Funds

Ministerial Foreword

This document sets out how the Scottish Government plans to direct our share of the replacement for the European Structural Funds.

As we move ever closer to the end of over 40 years of the Structural Funds investment in Scotland, which in the last 7 year programme alone have contributed £780 million, or just over £100 million per annum, to projects across Scotland, it is worth reflecting on some of the activities that they have supported over the years. They have invested in infrastructure such as the Westerns Isles Spinal route and broadband in the Highlands and Islands, paid for research and innovation in in marine renewables, enabled our cities to become "smart", helped thousands of young people into training and employment, created opportunities for businesses to grow and develop, supported our culture and heritage and paid for projects that will help Scotland to realise its net zero ambitions.

Whilst Structural Funds have paid for some hugely important investments and activities, it is not only the financial aspects that will be missed in Scotland, but the opportunities that Funds created to learn from other parts of Europe and to share ideas and experiences with a diverse community of policy makers. This outward looking, collaborative focus is something which a UK-only fund will find difficult to replicate.

As I write this, less than 2 months from the end of the Structural Funds in Scotland, the Scottish Government and our colleagues in the other devolved nations still have no idea what type of programme the UK Government is planning. We do not know the quantum of support that may be available to us. We do not know which funds will be replaced. We have no idea what conditions may be placed on the funding. We do not know how long the fund will be for or when it might start. We do not know if we will be entrusted with the budget or the freedom to deliver on the plans in this paper. And we do not know whether it will respect the long-standing principle of partnership.

Had we remained in the European Union, we would have had full involvement with the development of plans for this new programming period, and we would know exactly how much was coming to Scotland and how it would be spent. As things stand now, it is both regrettable and remarkable that the UK Government has chosen not to include us in the development of the replacement funding, given the central position that the Scottish Government has played in delivering these funds for many years. It is also at odds with the UK Governments own 2018 commitment to " … respect the devolution settlements in Scotland, Wales and Northern Ireland and … engage the devolved administrations to ensure the fund works for places across the UK."^[1]

Given the tight timescales we have no choice but to develop our processes to deliver this programme and to proceed on the basis that full funding to do so will be devolved to Scotland by the UK Government. I remain hopeful that this will be the case and that we will be able to work with our partners and colleagues across the country to deliver a Scottish Shared Prosperity Fund that supports our common growth ambitions.

This is a long term strategy, one that not only considers how best to ensure that the places and sectors across Scotland worst hit by the COVID pandemic have rapid access to the support they need to drive recovery, but that these same places have assurance that this support will be available over the longer term, allowing them to address deep rooted disparities.

Therefore, the approach that the Scottish Government plans to take will see the vast majority of this money devolved to the places and people in Scotland that need it most. Along with money, powers to develop and deliver local programmes and activity will also be devolved to the lowest appropriate level. We will empower regions, local authorities and communities right across the country, helping them to address constraints and challenges that are specific to them.

Councils will play a central role in the approach that we propose to take. Councils have been and will remain integral to determining and deciding regional strategies in the form of growth deals, regional economic plans and a variety of other activities. We recognise and will build on this expertise when we roll out this programme.

All of this will be done within the context of Scottish policy and will align to our National Performance Framework. The Scottish Government will maintain a strategic role, working in partnership with regions across Scotland to agree plans and ensure that the funding is achieving its intended outcomes.

We will not create additional unnecessary bureaucracy with this programme, and so will work with existing and emerging regional economic vehicles including the Regional Economic Partnerships, Highlands and Islands Enterprise and the South of Scotland Enterprise, building on their local knowledge and ability to hit the ground running.

However, we cannot do any of this unless the full amount of funding due to Scotland is transferred in its entirety and without any conditions from the UK Government to the Scottish Government. In the forthcoming Spending review we therefore expect the UK Government to honour its commitment to "at a minimum match the size of those funds in each nation"^[2] and commit to transferring at least £183 million per year to the Scottish Government to replace the EU Structural Funds, and the European Territorial Cooperation and LEADER programmes. This equates to a 7 year replacement programme of £1.283 billion^[3]

I am pleased that these plans have been developed in conjunction with stakeholders across Scotland: we have been very clear since the start of this process that we would work with partners across the country to shape a programme that meets their needs. Not only did the information and views which we gathered as part of our extensive consultation process inform our thinking on policy and how best to ensure value for money, but the steering group that I formed to help us deliver our policy aims has played a key part in arriving at the ideas which are set out here.

I would like to thank everyone who has supported us with this work, whether it was by submitting a consultation response, attending a seminar or contributing to the drafting process. I am especially grateful to the members of the Steering Group, in particular the Chair, Professor David Bell, and the Co-Chair, Professor John Bachtler, for their committed and enthusiastic participation.

Ivan McKee,
Minister for Trade, Investment and Innovation
November 2020