Regional economic policy - letter to UK government: 20 February 2023

20 February 2023 

Dear Michael,

On 24 January I wrote to your Minister, Dehenna Davison, regarding the Levelling Up and Regeneration Bill, building on earlier communication from the First Minister to the Prime Minister welcoming a shared commitment to working together pragmatically in pursuit of the interests of the people our governments serve.

The First Minister also welcomed your express interest in opportunities for the Scottish and UK Governments to engage more constructively in the future. I would therefore like to invite you to discuss the Scottish Government’s proposals for the future of the funding and development of regional economic development in Scotland, as set out below in this positive spirit of partnership.

I would like to focus our discussion on three key issues:

Firstly, I would like to discuss devolving the Scottish Barnett share of all remaining Levelling Up Funding to the Scottish Government, as initially planned in the Spending Review of 2020. The Scottish Government would then distribute this in line with our National Strategy for Economic Transformation, and the recommendations made in our Regional Economic Policy Review (published in December 2022).

Secondly, I would like to propose that the UK Government work with Scottish Government to develop and co-fund long term regional economic compacts across all Scottish Regional Economic Partnership Areas, starting perhaps with a pathfinder in a specific region.

Finally, I would like to reiterate that all future regional economic policy and funding interventions that the UK Government wishes to deliver in Scotland should devolved to and delivered by the Scottish Government in partnership with the UK Government where appropriate, as is currently the case with the City and Region Growth Deal and Green Freeports Programmes where we share parity of esteem.

Such a proposal would no doubt be welcomed by those regional partners who were unsuccessful in their Green Freeport bids, and who have made representations to both our Governments requesting targeted propositions that take account of regional strategies. I stand ready to discuss with you whether and how it may be possible to build on aspects of their bids, particularly in the context of the early stage official engagement on Investment Zones. 

I very much hope that we can work together to deliver effective regional economic development in a similar spirit to our successful collaboration in other areas, and ask that your Private Office contact DFMCSCR@gov.scot to make necessary arrangements.

I have copied this letter to the First Minister, the Minister for Culture, Europe and International Development, and Minister for Business, Trade, Tourism and Enterprise, and the Minister for Just Transition, Employment and Fair Work.

 John Swinney