7. To ask the First Minister what the Scottish Government’s response is to reports that Scotland faces a penalty of up to £190 million because of irregularities in its European Union structural fund spending. (S5F-04866)

Since 2014, the Scottish Government has allocated more than £700 million of European structural funds to support thousands of people and communities—investing in low-carbon projects, helping people with training and skills development and supporting vital local charities. That funding has been pivotal in supporting smart, sustainable and inclusive growth over a number of years.

The Scottish Government does not face a penalty of up to £190 million in relation to its European structural fund spending. The figure is based on a worst-case scenario of both the European social fund and the European regional development fund remaining in suspension. As the Minister for Trade, Innovation and Public Finance, Ivan McKee, has advised Parliament, the European regional development fund suspension was lifted by the Commission in December 2020, and we continue to work closely with the Commission to progress the lifting of the European social fund suspension.

I am grateful for the First Minister’s detailed response. The First Minister will be well aware that my Highlands and Islands region has been one of the United Kingdom’s top three beneficiaries of structural funds—from the Kessock bridge to the University of the Highlands and Islands. That funding has sustained and developed the local economy. However, the European Commission has expressed concern for years about two points: weaknesses in the verification checks by the Scottish Government, and failure to meet annual spending targets. Will the First Minister explain why that situation was not resolved? It is now resulting in millions of pounds being lost to the Highlands and Islands and to the rest of Scotland.

The First Minister:

The Scottish Government works closely with the European Commission on such issues. They are often highly technical matters, but, as I said in my original answer, we were pleased that the ERDF suspension was lifted in December. I will ask Ivan McKee to write to David Stewart in more detail about the steps that we are taking to address some of the criticisms that have been made, and to give reassurance on those matters.