Scottish and UK governments clash over £300m levelling up ‘shortfall’



SNP ministers have clashed with their counterparts in London in a row over Levelling Up and a £300 million shortfall.

Richard Lochhead said the post-Brexit Shared Prosperity Fund (SPF) would deliver just £212m to projects north of the border over the next three years.

He claimed that if Scotland was still receiving support from the EU’s structural funds, then the Scottish Government would have received closer to £549m.

However, a UK Government source rubbished the minister’s claim, describing it as “categorically wrong.”

They said the SNP was trying to manufacture a “phoney row about numbers.”

The European structural funds are a set of pots designed to support growth in areas struggling with serious economic and social problems.

As a member state of the EU, the UK was eligible for financial support from the European Regional Development Fund (ERDF) and the European Social Fund (ESF).

The money from Brussels helped pay for the upgrading of roads in Harris and Skye, improving Dalmarnock Station in Glasgow for the Commonwealth Games, and funding the Falkirk Wheel canal boat lift.

When the UK left the EU, the Tories promised that there would be no detriment. They said money normally sent to Brussels by the UK would plug the gap.

The SPF is one of the central pillars of their Levelling Up agenda 

One of the big differences between the two schemes is that previously the Scottish Government would manage the EU funding, dealing directly with Europe.

The UK Government now bypasses ministers in Edinburgh, with Scottish local authorities and organisations applying straight to the Department for Levelling Up in Whitehall. 

Among the projects to benefit so far are the CyberQuarter at Abertay University in Dundee, and the National Robotarium based at Heriot-Watt University in Edinburgh.

The fund is also being used to back projects such as the redevelopment of Inverness Castle, the renovation of the Westfield Roundabout in Falkirk, and a new marketplace in Aberdeen city centre.

So far, the UK Shared Prosperity Fund has allocated £32m to Scotland in 2022-2023, £55m in 2023-24 and £125m in 2024-25.

But according to Scottish Government calculations, replacing the ERDF and ESF should cost £162m a year. 

This would increase to £183m a year when the rural development LEADER funding programme is included.

And while the UK Government funds are allocated over three years they are delivered as single year payments.

That means any underspend must be returned by local authorities to the UK Government at the end of each year.

Mr Lochhead said that deadline was leaving councils scrambling to spend money.

He called for the Shared Prosperity Fund to be entirely devolved.

The Employment Minister said: “EU structural funds have made a real difference across the country, helping more people into work and delivering new skills through better training and support.

“This welcome contribution from the EU has been eradicated by Brexit and the UK Government’s replacement for EU funding has fallen far short in both the quality and quantity of what is required.

“The UK Government has ignored the devolution settlement and failed to recognise the authority of the Scottish Government in devolved areas.

“This replacement for EU funding ought to be fully devolved, allowing  funding to flow to regions and communities in line with shared Scottish policies, designed to best serve Scottish needs.”

Responding to the press release from the Scottish minister, a UK Government source said the money from Brussels did not stop suddenly when the UK left the EU. 

As projects are still receiving European funding allocated before Brexit, they argued that this meant Scotland was not losing out, as the money from the SPF increases as the EU money tapers out.

The source said: “These claims are categorically wrong. Contrary to the Scottish Government claims, the UK shared prosperity fund will match EU structural funds and will get rid of EU red tape.

“UK SPF is part of a £2 billion package of UK Government Levelling Up funds, which is being directly invested in Scotland.

“Rather than attempt to manufacture a phoney row about numbers the SNP should welcome a scheme which will improve previous funding from Brussels and bring enormous benefits to Scots.”

Nearly all of Scotland’s councils bid for cash during the recent Levelling Up fund bidding process. By August there were around 50 applications, including seven from Glasgow City Council.

Earlier this week, the Scottish Office said the amount spent was equivalent to £380 for every man, woman and child in Scotland.

Secretary of State for Scotland Alister Jack said: “There’s a lot of momentum building in both the pace and scale of levelling up right across Scotland.

“I’m not just talking about the amount of money, but real bricks and mortar, real jobs, and a real sense of excitement about what is going on.

“What we are seeing are the dividends of working together, listening to the ambitious ideas of local organisations, and bringing in the resources to make things happen.”

Last month, Welsh First Minister Mark Drakeford claimed Wales had lost out on £1.1bn of funding.





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