Scottish Replacement For EU Structural Funds

Executive Summary

The purpose this document is to set out the Scottish Government framework for Scotland's allocation of the UK Shared Prosperity Fund, which will replace European Structural Funds following the UK's exit from the EU. The results of the public consultation, which was held between November 2019 and February 2020, have informed thinking and the Scottish Government has developed this plan in partnership with our expert steering group, chaired by Professor David Bell of University of Stirling, and other external stakeholders.

Four key areas were addressed: Funding and Allocation; Governance and Delivery; Policy Alignment; and Monitoring and Evaluation. Each was considered in depth and a paper with recommendations produced for each. This document brings together the thinking from across these papers, setting out the high level strategic framework for a Scottish Shared Prosperity Fund.

Assumptions

The lack of clarity from the UK Government is key in all of this. We remain unclear of their intentions, the recently launched Internal Market Bill implying they will lead and direct funding with no regard for the wishes of Scotland or the Scottish Government or the evidence base of 'what works' in regional and local development in Scotland.

In the meantime the Scottish Government will continue to progress thinking on how a Shared Prosperity Fund in Scotland may be directed, shaped and governed and has therefore based this work on some key assumptions:

• the UK Government will provide the Scottish Government with an allocation of funds that at least matches the level of previous European Structural Funds allocations in real terms;
• Scotland will have the freedom to allocate funding to the places and priorities that we choose and which align with our own policy aims and objectives;
• the programme will align with the Scottish Government's established "inclusive growth"^[4] approach together with our focus on Covid recovery;
• The programme will be multiannual, lasting at least 5 years or 7 years if the UK replacement scheme matches the European Multi Annual Financial Framework;
• the replacement funding scheme will cover the European Regional Development Fund (ERDF), the European Social Fund (ESF), and the European Territorial Cooperation Programmes (ETC).
• As a consequence of the lack of clarity from the UK government around whether the work of the LEADER programme is included in the scope of the Shared Prosperity Fund we have proceeded on the basis that LEADER will be included. Clearly LEADER^[5] cannot form part of this programme without a transfer of funds for its replacement from the UK Government.

Aims and Policy

• The key aim of the programme will be to focus on addressing and reducing economic and social disparities within and between places and people in Scotland;
• Decentralisation of funding is at the core of this approach, and we want to ensure that decisions are made as closely as possible to the people, businesses and communities who will be impacted;
• The themes for the Scottish programme will be Improving Places, Reducing Poverty, Increasing Skills, and Growing Business and Jobs to aid a just and green recovery from the COVID pandemic;
• Enhancing wellbeing and responding to the climate change emergency will be underpinning principles of the programme;
• As noted above, the policy area currently supported by LEADER will be considered as part of the Scottish programme, if they are not covered in the replacement for CAP, but this can only happen subject to funds for this being made available by UKG.

Governance

• The governance of the programme will be tiered: the Scottish Government will be the strategic lead whilst regional partnerships will be the main bodies charged with developing and funding programmes for their areas;
• These regions will align with the Highlands and Islands Enterprise (HIE) and South of Scotland Enterprise (SOSE) areas and we will seek to make use of the developing network of Regional Economic Partnerships (REPs) across the rest of Scotland;
• The programme will seek to empower communities across Scotland to develop and deliver activity and to devolve responsibility for action to the lowest appropriate level;
• The programme will be multi-annual, at least 5 years.

Governance – National Programmes

• A final model is still to be decided upon – options are to directly fund national agencies to deliver support across Scotland, or, to route all monies through the regions who will each contract with national agencies to deliver support in their area;
• Discussions have shown a preference for routing the monies through regions however this is still to be fully agreed;
• Whichever model is decided upon, we will liaise fully with the relevant stakeholders and delivery bodies to ensure that the final model delivers a suitable balance between local accountability and equality of access to key programmes such as apprenticeships, and policy approaches such as "No-one left Behind".

Funding and Allocation

• A transparent, needs-based regional allocation model will be developed by the Scottish Government. This need not align with the allocation model(s) used in other parts of the UK;
• The model will use a basket of weighted measures which will then be applied across each regional partnership geography to determine the share of the fund to be allocated to that partnership;
• Funding will be allocated to each regional partnership for a 5 year programme that will be agreed in advance with Scottish Government and support the achievement of national aims and objectives;
• Regional partnerships will be free to allocate money as they wish in their regions, guided by principles which align their plans with national priorities that support place based and community wealth building approaches;
• Regional partnership leads must involve communities and citizens in the development of their plans and allocation models, engagement with communities must be inclusive and follow the principles set out in the National Standards for Community Engagement;
• Regional partnerships should include options within their allocation models to enable communities direct access to the funds to address locally identified priorities that are aligned to the overall programme outcomes.

Monitoring and Evaluation

• The Scottish Government will develop a Monitoring and Evaluation Framework which will focus on outcomes and outputs, rather than activities and inputs;
• The framework will explain what is to be achieved in terms of economic impacts, benefits for business, etc.; articulate a fit with the business plan and strategic objectives such as the National Performance Framework (NPF); identify the activities to deliver and the resources required to achieve the selected objectives; develop a logic model to evidence how the resources and activities will align with achievement; develop SMART objectives for assessing performance; identify key measures to track performance and ascertain how data will captured together with the roles and responsibilities of all involved; and plan for review and evaluation;

• The development of the monitoring and evaluation framework shall be done in parallel with the design of delivery arrangements for the replacement funding Programme;
• The National Performance Framework will be used as an over-arching framework rather than a prescriptive list of indicators;
• Additionality of any support must be considered at the outset during appraisal;
• The monitoring and evaluation framework shall focus on the results that can be attributed to the replacement fund and be proportionate to the activity supported;
• Monitoring and evaluation activity will reflect the Scottish Government's focus on economic, social and wellbeing performance but should maintain some awareness of how the next set of European Structural Fund Programmes will be delivered for the 2021-27 period;
• A separate Appraisal Group will be set up to consider how the appraisal process will work within a tiered management system of delivery.

Areas for Further Work

As noted above, this framework sets out the high level aims of the programme – without further information from the UK Government it is not possible to develop this further. Once this has been agreed our next steps will be to work with partners across Scotland to develop the detail on each area of this plan, agree regional allocations and activity, and set up financial, audit and IT arrangements.