Hansard

I thank Liz Smith for her intervention, which gives me the opportunity to say that one of the big issues with the fund is that it goes only to local authorities, and many organisations and national projects will lose out as a result.

The UK Government made a promise that the lost EU funding would be replaced with an equal, if not greater, fund. It also told us that it would respect devolution. For members who have doubts about that, let me quote UK Government ministers themselves. In 2020, Simon Clarke said:

“The key point is that we want to make sure that this gives the Scottish Government meaningful control over key aspects of resources.”—[Official Report, House of Commons, 22 January 2020; Vol 670, c 101WH.]

In 2020, Simon Hart said:

“nothing contained in the proposals for the shared prosperity fund will in any way drive a coach and horses through the devolution settlement.”—[Official Report, House of Commons, 15 January 2020; Vol 669, c 1007.]

In 2021, Robert Jenrick said:

“The UK shared prosperity fund will ensure that at least as much, if not more, funding goes to communities in Scotland than would have been received if we had stayed within the European Union.”—[Official Report, House of Commons, 22 February 2021; Vol 689, c 622.]

However, here we are, in 2022, and we know that all those promises have not been delivered on. All the promises have been broken. The UK Government is offering Scotland £212 million over a three-year period, which is way below our expectations and way below matching EU funding.

The Scottish Government calculates that £183 million per year is required to replace EU funding. Multiplying that over the same three-year SPF period, Scotland should receive at least £549 million, so the UK Government’s figures simply do not add up. That £212 million equates to a 60 per cent reduction in real terms, and we know that, from this smaller pot, the Highlands and Islands are getting an even smaller share. Whereas they previously received 19 per cent of the total awards from the EU, they now stand to receive just 11 per cent of the SPF allocation for Scotland. Let us think about that for a second. The flagship of EU investment in Scotland—the area recognised as having some of the greatest economic barriers to development—will now receive just £24 million over three years. The Highlands and Islands, like the rest of Scotland, are certainly losing out.

It is a struggle to understand the UK Government’s claims that the SPF is a full replacement. No amount of mental gymnastics can lead to that conclusion, but I want to test it. Did the UK Government perhaps decide to mirror the 2014 allocations, with no inflationary uplift? No. If we use the figures from the most recent EU programme, our annual average allocation was £111 million. Therefore, over three years, we should be receiving £333 million. If that is the case, we are £121 million short, or 36 per cent down on what we got in the EU programme. Would the Barnett consequentials have delivered for Scotland? No. We are not even getting a Barnett share of funding, which would be more than £252 million for three years. We are £40 million, or 16 per cent, below that figure.

Any way we cut it, the £212 million that has been allocated to Scotland falls way short, so how is the UK Government justifying its claim that it is offering an equal replacement? It seems that it is adding the unclaimed funding from the current EU structural fund programmes to the shared prosperity fund value to make a new total and saying that it is matching the funds. We have to ask: how can it possibly be the case that the UK Government can include funding that it is claiming to also fully replace? The EU funding is already committed to serving EU priorities, so how can it be part of the shared prosperity fund? It does not make sense—it does not add up.

Maurice Golden is laughing, but I would like to hear him explain how the UK Government can claim to be matching those funds. The UK Government seems to be treating us all like fools. Perhaps the member is treating us like fools as well.

Neither the Scottish ministers nor the office of the chief economist for Scotland agreed to or endorsed the overall quantum or the allocations to each local authority in Scotland. There was no opportunity to do so, because no formal governance was established ahead of the launch of the shared prosperity fund to provide a forum for agreement. How on earth can the fund have been appropriately launched and managed without any governance or role for the Scottish Government?

For close to three years, Scottish ministers have been calling for the devolution settlement to be respected and for the UK Government to preserve the powers that we have been elected to exercise. Those justified requests were all ignored. The review into intergovernmental relations set out proposals for how each of the four nations’ Governments might work together more effectively. Mr Gove responded by stating that he wished to work more cohesively and transparently with us all. Although Scottish ministers expressed a willingness to engage, the First Minister said that the real test would be whether the UK Government was capable of acting with good will and trust. It is clear that it is failing that test as well.

Scottish ministers have been excluded from any decision-making role in the fund, and the recently shared terms of reference for a joint ministerial board make it explicit that UK ministers will always have the final say. The devolved Governments have been invited to join the board as advisers, but our job is not to serve the UK Government. We were not elected to advise Westminster; we were elected to lead, to make decisions and to take responsibility for the future wellbeing of Scotland. I agree with the Welsh Minister for Economy, who stated:

“The proposed role of the Welsh Government also falls short of ... genuine co-decision making ... On this basis, it has not been possible to endorse the approach the UK Government is taking”.

Likewise, the Scottish Government cannot endorse the shared prosperity fund, as it entails losing out on funding and losing our democratic right to devolved authority.

We often hear Opposition MSPs speak about the city region and growth deals in Scotland as a very good example of partnership working between Governments. I do not disagree, but it is vital that I point out the differences between the shared prosperity fund and those deals. The city deals programme was founded on the basis of equal funding and a robust governance structure whereby no approvals or key decisions are made without agreement. That is a different dynamic, with a different agenda, that establishes parity of esteem between Governments and their regional partners. By contrast, the UK Government has deliberately designed the shared prosperity fund so that it is the sole decision maker and funder, with no call to match funds and no role for the Scottish Government. The Scottish Government cannot be an equal partner when it has no say in how the money is being used. No one should be misled by the attempted comparison to the city deals—the shared prosperity fund is not a fund of equals.

That disingenuous behaviour is also seen in the role that has been given to members of Parliament in relation to the fund. The application process is structured so that investment plans must receive endorsement by local MPs. That is a deliberate manipulation of the system to politicise public funding and make claims that MPs endorse the fund, when, in fact, funds are put at risk if MPs do not give their endorsement. Approval cannot be forced and called endorsement without twisting the truth.

It is a cold irony that, at a time when we are witnessing the worst cost of living crisis for generations, with some people facing the horrendous choice between heating their homes and feeding their families, the UK Government is allowing only local authorities to access the shared prosperity fund. By cutting out the third sector and employability organisations that previously received EU funding, the UK Government is removing any certainty about future funding for organisations that can really make a difference to those who are struggling the most. The briefing sent to MSPs by Citizens Advice Scotland makes that point very well.

Part of the purpose of EU funding is to strengthen economic, social and territorial cohesion by reducing regional imbalances, particularly for remote and rural communities. One of the most recognisable EU-supported schemes in Scotland is the LEADER programme, which delivers bottom-up support to communities for rural development. The current programme supports more than 900 projects across rural Scotland, including 400 initiatives for young people and disadvantaged groups. However, the shared prosperity fund does not replace LEADER, nor are there obvious opportunities for beneficiaries to access similar support through the shared prosperity fund.

Indeed, if local authorities cannot make a link between LEADER projects that might approach them for funding and the pre-determined menu of investment options that has been set by the UK Government, it will be challenging for the shared prosperity fund to continue to support those unique projects. There is real concern that, with the relatively small amount of funding that has been allocated to the more remote and rural areas of Scotland, our smaller community groups will lose out. For example, communities in the Western Isles and Clackmannanshire will each have access to just over £2 million in total.

Other opportunities have been lost as a result of our being hauled out of Europe, such as our being hauled out of the European territorial co-operation programmes. If Scotland is unable to continue with those programmes, we will miss out on co-operation with our European neighbours on shared challenges such as climate change, health in rural areas and the preservation of biodiversity.

Not only are we losing out as a result of the shared prosperity fund, but barriers are put being put in the way of achieving our own goals as a result of levelling up and Brexit. Before Brexit, the UK Government at least appeared to recognise our democratic mandate. However, it is clear that we are no longer dealing with a UK Government that respects the Parliament or the devolution settlement. We are witnessing an aggressive move by the UK Government to intervene in devolved areas. That is evident in its union strategy and the United Kingdom Internal Market Act 2020, which restores powers to UK ministers to spend in devolved areas—powers that had been devolved by the Scotland Act 1998. The Opposition might claim that we are witnessing devolution in action, with the money from the shared prosperity fund going directly to councils. However, that cannot be the case when an entire level of devolution is being excluded. What we really have is an example of the UK Government acting as though the Scottish Parliament simply does not exist. That is erasing devolution and ignoring the will of Scotland’s people.

I call on the Parliament to agree that the implications of the shared prosperity fund for Scotland are intolerable. We are losing out financially and we are losing our democratic autonomy. The UK Government must reverse both of those broken promises as soon as possible, so that we can deliver for the people of Scotland, our communities and our economy.

I move,

That the Parliament agrees that the UK Government’s Shared Prosperity Fund fails to meet the Conservative manifesto commitment to replace Scotland’s EU Structural Funds in full; understands that Scotland will receive only £212 million, which is £337 million short of the £549 million estimated to be an appropriate replacement for EU Structural Funds, and calls on the UK Government to immediately increase the value of the fund to at least the level provided previously by Scotland’s EU Structural Funds; believes that the failure to do this will leave communities and third sector organisations across Scotland without important resources needed to tackle poverty and inequality; further believes that the lack of decision making for the Scottish Government in the governance of the Fund undermines devolution; considers that this approach will fail Scotland’s communities, which have benefited substantially from decades of EU investment, and further calls on the UK Government to fully devolve control of the Fund to the Scottish Parliament and the Scottish Government.