European Structural and Investment Funds Replacement Consultation Steering Group minutes: March 2021

Attendees and apologies

Attendees:

• Professor John Bachtler (Co-Chair), European Policies Research Centre, University of Strathclyde
• Robin Clarke, Highlands and Islands Enterprise
• David Coyle, Skills Development Scotland 
• Douglas Colquhoun, Scottish Enterprise 
• Dr Stuart Fancey, Scottish Funding Council 
• David Ford, South of Scotland Enterprise
• Councillor Dr Steven Heddle, Convention of Scottish Local Authorities 
• Malcolm Leitch, Scottish Local Authorities Economic Development 
• Craig Wilson (on behalf of Anna Fowlie), Scottish Council for Voluntary Organisations 
• Cornilius Chikwama (on behalf of Gary Gillespie), Scottish Government 
• Anne Black (on behalf of Dominic Munro), Scottish Government 
• Hilary Pearce, Scottish Government
• Philip Raines, Scottish Government 
• Karen McAvenue, Scottish Government 
• Fiona Loynd, Scottish Government 
• Sean Jamieson, Scottish Government 
• Hannah Reid, Scottish Government 

Observers:

• Christine Mulligan, Skills Development Scotland 
• David Cowan, Scottish Government 
• Gillian Gunn, Scottish Government 

Apologies     

• Professor David Bell (Chair), University of Stirling
• Anna Fowlie, Scottish Council for Voluntary Organisations 
• Mary McAllan, Scottish Government
• Gary Gillespie, Scottish Government

Items and actions

Welcome and introductions

John Bachtler welcomed members to the twelfth meeting of the Steering Group and noted that the chair was unable to lead this morning’s session before welcoming new members and outlining the agenda.

UK Budget overview 

Karen McAvenue provided the Group with an overview of the announcements made at the recent UK Budget including: the Community Renewal Fund (CRF), Levelling Up Fund (LUF) and Community Ownership Fund (COP). 

Karen highlighted that the CRF would be a competitive fund across the financial year 21/22 only offering £220 million for the whole of the UK. This Fund will be focused on skills, supporting businesses, empowering communities and employability, and would be open to Scotland’s Local Authorities with a maximum of £3 million revenue funding being given per area. All Priority areas (13 in Scotland) will have access to £25,000 capacity funding whilst noting the extremely tight timeline for bids with a deadline of noon on Friday 18 June 2021. 

Karen explained that the UKG had developed a methodology for both the CRF and LUF in which places had been ranked on priority however this has raised concerns around the relevance of the indicators utilised. Whilst the ranking for CRF was based criteria including productivity, employment, and household income, the Levelling Up Fund was based on a more complicated process, using both GB wide and national indicators – starting with a measurement for the need for economic recovery and growth using GB- wide data on productivity, unemployment rate, and skills) followed by utilisation of national indicators with a need for regeneration (based on commercial and dwelling vacancy rates for Scotland). 

Karen noted that the Levelling Up Fund will run from 2021 until 2024 to fund larger schemes than those supported through the CRF. This funding will be capital based and be competitively provided with priority being given to predetermined areas. Focus for Round 1 will be placed upon transport, regeneration, culture and heritage projects with Local Authorities able to submit one bid plus one additional transport bid. 

Before noting that the metrics used in the LUF overlook transport connectivity in Scotland but not in England due to a lack of identical data. The lack of this indicator in ranking development is concerning as it overlooks significant areas such as the Highlands and Islands region which has been a major recipient of EU Structural Funds under alternative regional growth metrics.  

Karen commented that how the Community Ownership Fund will be implemented remains unclear.  Despite aiming to provide community groups match funding support of up to £250,000 to buy assets in their area which are at threat of closure, further details are still to be provided by the UK Government (UKG).

Finally, Karen noted that information on the UK Shared Prosperity Fund (UKSPF) had been lacking in these announcements but the CRF has been set up as a pilot for its rollout in April 2022. Before highlighting that going forward the Scottish Government will continue to engage with the UK Government on an official and ministerial level to ensure these Funds and the UKSPF meet the needs of Scotland whilst recognising that it is likely the role for Devolved Administrations is at risk of being purely administrative.  

UK Government Budget Stakeholder Reception 

John Bachtler thanked the Karen for the overview of the UK Budget and asked for members to provide the Group with an insight on how these announcements had been received in their areas. 

Local authority perspective 

From a local authority perspective, members made clear that little was known further to what that had been announced and what was said as part of MHCLG webinars on the Funds. Before noting that it was unclear how stakeholders garner MP support and how this will work in practically for areas such as the the Northern Islands given that Orkney and Shetland have separate local authorities but share one MP.

Members noted that Local Authorities received no additional information and it is concerning that these Funds will only add confusion to an already cluttered funding landscape. It was noted that COSLA had been regularly meeting with Iain Stewart MP, Parliamentary Under-Secretary of State for Scotland and had been pressing for more involvement in the development of the funds as well as the need to ensure alignment of the Funds with SG priorities.

In addition, members questioned the metrics used to rank each Local Authority, with economic areas not always aligning with Local Authority boundaries and concerns that labour force data does not represent the true landscape. The Group suggested that a better classification approach needed. 

Similarly, on a practical level, the Group raised concerns about the potential time wastage as local authority officers will process applications which may not attract support.  The lack of opportunity for multi-annual planning  was also noted as disappointing.  

European Territorial Cooperation (ETC)

Members noted that there a strong wish for Scottish Government to consider the financial impact of the funds which ETC brought to the UK (possibly £1billion) which may be dismissed by UKG. 

Third sector

The members representing the third sector, felt that greater clarity on all the Funds was still required. 

It was noted that SCVO’s partners across the UK have worked on a joint statement on these funds and UKSPF stating their concerns. Due to both Brexit and the pandemic, the Third Sector is not fully engaged with these Funds and the impact they are likely to have. Finally, concerns were raised around the timescales of these Funds with members noting that it  would be difficult hard to see how the CRF will be a pilot for UKSPF and it is unlikely that anything useful will come of it.

Scottish Enterprise agencies

The members representing the enterprise agencies shared the concerns over a lack of information, the issue of MPs having to support LA bids, and the rule that there can only one bid per area. The timescales for submission are unrealistic and, as intimated by members representing the local authorities, there is concern around the time LAs will spend working on bids which may not be accepted.  

Further concerns were raised that Local Authorities may not be the best vehicle for economic development and the lack of regional focus was raised. Members commented that despite economic development being undertaken in Scotland at regional level yet the CRF is to focus on tackling local issues, which feels like a step back. 

Before noting that these Funds seem to have created a disconnect between development at local, regional and national level and has been developed without proper consideration of Scottish stakeholders. With an overarching concern that applicants may seek funding to deliver their own agenda without thinking more strategically about the impact. 

Rural perspective 

From a rural perspective the Group noted that  prioritisation of places is a key issue and it is unclear how MHCLG came to their decision on this. Aside from the transport connectivity issue, the “Dwelling Vacancies” is also an anomalous indicator for Highland and Island Communities, as the region has a shortage of houses - this is a huge factor that has not been considered showing that UKG have a lack of understanding of Scottish rural places. 

Members highlighted that the approach adopted for the CRF should not go ahead for the UKSPF and any other future funding announced as it would likely create fragmentation. 

Members noted that prioritisation was a key issue future consideration should be given to how national prioritises can be implemented when funding is targeted on such as localised basis.  

Members also flagged the lack of clarity regarding the replacement for  LEADER programme and this must be addressed. 

The Group finally highlighted overall lack of coherence around the three funds and noting as the focus of the funds is on urban activities, rural and islands areas may be overlooked. However realised that these Funds will go ahead regardless and further consideration should be taken to ensure the benefits are maximised where possible.  

Skills perspective 

Members noted that in comparison to the depth of planning for previous EU Structural Funds Programmes, these announcements have been designed very quickly without the same level of consideration. Before noting that competition amongst Local Authorities may create rivalries instead of creating collaboration. 

In regards to skills, members noted that foundation and graduate apprenticeship products have benefited in the past from European Structural Funding and have been hugely important skills development policies for young people in Scotland. Before raising concerns of the inability to  continue these important activities using these new funds given the fragmentation of budgets across Local Authorities, SG and UK Government.

Members raised concerns regarding the centralisation of the announced Funds, highlighting the lack of information and engagement by UK Government as creating confusion with previous funds being channelled through Scottish Government Frameworks. 

Likewise the Group highlighted the lack of an overarching strategic approach to these funding announcements and the lack of contact between MHCLG and skills organisations in Scotland is concerning with the potential that funding will not be targeted effectively.   

Academic overview

Members noted that from an academic perspective Funds signal the abandoning of the regional development approach and are instead taking a greater focus upon the regeneration of towns coupled with actions to strengthen the union. Before noting the politicisation of the funds being extremely evident and concerning that this will negatively impact objective evaluation of projects.  

Discussion

Karen McAvenue advised the Group that the team will be working with Office of Chief Economic Advisor on indicators and how they impact in Scotland, OCEA confirmed that his team has been looking at the indicators and they aware they are lacking in some areas. 

Hilary Pearce thanked everyone for their comments and noted that it is good to see everyone shared SG concerns.  Both Scottish Ministers and officials will continue to press UKG for information and the concerns around the application timeline will be highlighted. 

Members wished to highlight the potential frustration which Local Authorities will likely be facing over the additional amount of new work coming and the lack of information given for these new Funds. Noting that if the CRF is the pilot for UKSPF this frustration will only grow. 

John Bachtler thanked everyone for their contributions. Noted the universal unhappiness across the Group around how the new Funds have been developed, their focus and the general disregard for previous skills and experience.  The lack of certainty and predictability was also an issue across the board. Before providing a summary of the concerns raised during the discussion: 

Strategic concerns:

• no conceptual framework
• loss of a coherent national approach
• loss of sub regional approach
• no continuity and a lack of policy alignment
• increased clutter in an already complicated landscape

Spatial concerns:

• problematic methodology
• concern that transport indicators were missed
• issues around the selection of indicators more generally

Governance:

• lack of consultation with SG and other key Scottish stakeholders
• overriding devolved arrangements
• potential to create competition and rivalries
• sense that this is a backward step in terms of regional policy

Implementation:

• confusion over MP support and the potential for politicisation
• short deadlines
• lack of scope for lessons learned
• serious concerns for capacity in LA particularly smaller ones
• increased scope for inefficiencies

Other:

• wider policy concerns that decisions made now may factor into other policy areas like state aid
• continued uncertainties around ETC and future of LEADER
• precursor of what the UK might do in the future

Members concluded by noting that the funds are not going away so we need to make the best of them. Members agreed that going forward they must ensure the benefits of these Funds are maximised for Scotland whilst minimising any challenges by ensuring the CRF does not act as a blueprint for the design of the UKSPF as well as ensuring strong engagement across Devolved Administrations and with Scottish stakeholders. 

Future engagement and role of the Steering Group

Sean Jamieson presented a paper on the future of the Steering Group. Noting that the he Group was originally created to support the Scotland-wide consultation but this has been completed.  The UKG announcements mean SG has largely been cut out of a delivery role but despite this, SG should carefully consider our next steps.  Before acknowledging the wealth of expertise contained within this Group and the SG Ministerial view that it should not be lost. With that in mind, presented are three options for the future of the Group: 

• a: the group is disbanded or suspended
• b: the group take on an engagement role, influencing the development of the UKSPF and the new funds
• c: Group purview is extended, ensure the new funds align with SG regional policy aims and objectives

There was a general view that the group should continue and that whist Option C was not out of the question, our immediate focus should be on the UKSPF and its position in “place based” policy going forward.

Hilary Pearce noted that she was glad that members wished to continue their role and highlighted the strong appreciation from Scottish Ministers for the guidance provided by the Group thus far. 

Members wished to thank the Future Funding Secretariat for continually updating them on a weekly basis on any progress within the funding landscape but suggested that this be reduced to fortnightly to reduce the burden on them. 

Any other business

John Bachtler thanked members for their contributions before inviting members to raise any additional business items. 

With no further comments, John Bachtler thanked for all attending and wished members a good break over the Easter period, noting that the Future Funding Secretariat would likely be in touch after the Scottish Parliament elections in May.  

Future Funding Secretariat 
March 2021