RSE Response on the Funding of EU Structural Fund Priorities in Scotland Post-Brexit

The RSE has responded to the Scottish Parliament’s Finance and Constitution Committee on their Inquiry into the Funding of EU Structural Funds Post-Brexit. The response illustrates that the cessation of Structural Funds in the UK presents an opportunity to develop a new fund (the Shared Prosperity Fund). Therefore, in the development of the Shared Prosperity Fund, both the UK and Scottish Governments should aim to reduce barriers to investment in projects and make processes, such as administration of funds, more efficient.

Paper summary

Since the Brexit referendum, the RSE has been engaged through our EU Strategy Group which has produced position papers, as well as responses to inquiries and consultations.

In the funding period 2014-20 of Structural Funds, Scotland has experienced relative success in funds as it received a level of fund proportionate to its population which was more than it would have received through the EU distribution formula. Moreover, if the Structural Funds continued to be accessed it is projected that Scotland would receive around £715m in the next funding period from 2021-27; this is less than it received in the period 2014-2020 as Scotland is due to receive a maximum of circa £810m.

The replacement of Structural Funds by the Shared Prosperity Fund (SPF) is welcome. However, there is a significant level of uncertainty around the SPF including its objectives, and the level of funding that will be allocated to Scotland. Nevertheless, this an opportunity to develop a new system tailored to the different needs of the UK regions.

Within the SPF, the RSE recommends that the current level of funding that Scotland receives is maintained and how these funds are distributed falls under the responsibility of the Scottish Government. There is scope to rethink the way money is distributed, the intended recipients and the desired outcomes. It is recommended that the Scottish Government use a mix of indicators such as Gross Domestic Product (GDP) and the Scottish Index for Multiple Deprivation (SIMD) to distribute funds and that the new criteria for funding are clear and succinct.

There are several barriers within the current system which could be addressed in the development of the SPF. One of the largest is acquiring the resource and capacity, within both central and local governments, to develop and administer the new system. The level of compliance must be reviewed and the RSE would favour a sophisticated approach to compliance which would ensure compliance would be proportionate to the size of the project. It is important that the new approach is inclusive and that there is a significant level of stakeholder engagement to help reduce potential barriers to investment in projects.

Levels of administration will be reduced if the approach and processes are simplified. The SPF should not lose sight of the original purpose of the funds which is to reduce regional disparities. The distribution of funds could be tied to the wider economic and social policy of the Scottish Government. Therefore, using the Scottish National Performance Framework to monitor and evaluate funds and projects would be appropriate.

There is a level of uncertainty around the replacement of the Common Agricultural Policy (CAP) and how the SPF will relate to this. This needs to be considered as both will have a social element.