United Kingdom Shared Prosperity Fund

– in the Scottish Parliament on 2nd March 2022.

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Photo of Annabelle Ewing Annabelle Ewing Scottish National Party

The next item of business is a debate on motion S6M-03393, in the name of Richard Lochhead, on the United Kingdom shared prosperity fund and what it means for Scotland.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

European funding has brought significant investment to the whole of Scotland. From the New Lanark world heritage centre to the LEADER programme, which delivers economic development in our rural areas, and from the modern apprenticeship scheme to Moray’s income maximisation programme in my constituency, which helps families in need, the benefits are tangible.

However, we have always been concerned that the United Kingdom Government’s shared prosperity fund—the promised replacement for European Union funds following Brexit—would pale in comparison to the benefits of being in the EU. After seeing the levelling up white paper and pre-launch guidance on the replacement fund, I know that our concerns are justified. It is clear that levelling up means losing out for Scotland. We are set to lose out financially, we are losing our devolved authority and, crucially for our people, we are losing the benefits that we enjoyed as members of the European Union.

It is disappointing that the UK Government’s intention is not truly to replace the EU structural funds, as it promised back in 2017. Instead it is using the levelling up fund to prop up the unambitious, underfunded and strategically vapid levelling up agenda.

Photo of Murdo Fraser Murdo Fraser Conservative

Will the minister remind members how much money the Scottish Government had to repay to the EU structural funds due to financial irregularities?

Photo of Richard Lochhead Richard Lochhead Scottish National Party

As Murdo Fraser knows, all Governments have to deal with decommitment. That is part of the EU funding system. I will come on to the massive benefits that the funds have delivered for Murdo Fraser’s constituency and the whole of Scotland.

On the levelling up agenda, as the Institute for Fiscal Studies says, the UK Government

“has chosen its destination with no sense of how it plans to get there.”

The UK Government has positioned the shared prosperity fund as a main pillar of its levelling up agenda and we are told that the fund’s key aim is to “Restore … local pride”. That broad focus does not compare with the value of tackling regional economic inequality. With talk of mayors and renaissance Italy, levelling up has little relevance to modern Scotland.

Photo of Daniel Johnson Daniel Johnson Labour

In a sense, I agree with the minister. The logic behind the new fund is confused. Indeed, the metrics and the application process are unclear. However, we have gross regional inequalities in Scotland and surely those need to be addressed even if the shared prosperity fund is not the right way to go about it.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

Of course we have challenges with regional inequalities in Scotland. That is why the EU funds were so important over many decades. They helped to mitigate and tackle some of those challenges, which have been with us for generations.

The Scottish ministers set out a clear plan for Scotland’s share of the replacement funding back in 2020. Meanwhile, the UK Government has not even set out Scottish investment priorities or informed us of our allocation. When we first learned of the shared prosperity fund, we set out our asks. We expected to retain the same level of autonomy over allocations, governance and policy development, but UK ministers have so far failed to meet those expectations. We also set out a justifiable calculation of £183 million per year being devolved to the Scottish Government. That would provide a comparable replacement for the range of programmes available under the EU at that time.

Photo of Miles Briggs Miles Briggs Conservative

Does the minister believe that local government should also play a role in this and, if so, why is it not mentioned in his motion for the debate?

Photo of Richard Lochhead Richard Lochhead Scottish National Party

Of course the regional economic partnerships and other players across Scotland are involved in the setting of priorities for regional funding and of course local authorities have a say in that.

The Scottish Government has concluded from the UK Government’s autumn budget that Scotland’s share is unlikely to be delivered as promised. Our view is backed by the UK Treasury Committee, which suggests that the fund’s maximum £1.5 billion annual budget equates to a 40 per cent reduction on the amount that the UK receives from the EU in the current programmes. Although calculated for the whole of the UK, that confirms that Scotland will ultimately lose out big time.

Despite confirming the overall quantum, UK Government ministers cannot tell us whether that will cover all the various programmes that we had under the EU. The result is massive uncertainty—for instance, with the rural community-led development work that was previously delivered through the LEADER programme, which many members are familiar with. That brings much anxiety to those relying on such investment to function.

In 2019, the UK budget stated that replacement funding would

“at a minimum match current levels … for each nation.”

In 2021, the Secretary of State for Housing, Communities and Local Government, Robert Jenrick, went further, stating in Parliament that

“at least as much, if not more, funding” will go

“to communities in Scotland than would have been received if we had stayed within the European Union”. [Official Report, House of Commons, 22 February 2021; Vol 689, c 621]

However, it is clear that the UK Government cannot honour those commitments and, again, Scotland will lose out.

Through the United Kingdom Internal Market Act 2020, the UK Government is encroaching on devolved areas, as was discussed earlier this afternoon in the chamber. It is using Brexit, which Scotland did not vote for, to weaken devolution, which Scotland did vote for. It is undermining Scotland’s democratic voice.

Scottish Government ministers have consistently reminded the UK Government that we expect to be treated as a full and equal partner in the development of the shared prosperity fund. We retain the belief that Scotland’s share of the funding ought to be fully devolved. That will let us tailor it to the needs of Scotland and align with the ambitions that are set out in the national strategy for economic transformation.

By using the 2020 act to start spending in devolved areas directly with local government, the UK Government is sidelining the Scottish Government and the wider ecosystem that we have in Scotland of all our agencies and regional players. It is missing out on the breadth and depth of knowledge that we have of our own economy and Scotland is losing out on our devolved autonomy.

It is absurd to claim that reducing the role for the Scottish Government and working directly with our local authorities is real devolution in action. Real devolution is what the people of Scotland voted for back in 1997, when they chose to establish this Parliament, which on numerous occasions has agreed that the way in which the UK Government is implementing this policy is completely inconsistent with devolution and democracy in Scotland.

I met the Parliamentary Under Secretary of State for Levelling Up, the Union and Constitution, Mr O’Brien, and the Under Secretary of State for Scotland, Mr Stewart, last week. I emphasised the rightful authority of this Government in leading on the fund. They agreed to set out in writing how they see our role, offering some reassurance that it will not be as a peripheral adviser. I await that letter to see whether those assurances have any truth.

As the replacement funding moves further away from the positive aims of the EU funding that we had in Scotland, delivered by the Scottish Government for nearly five decades, we can see that it is an example of how much Scotland will lose from no longer having the benefits of EU membership. EU funding has supported projects such as the European Marine Energy Centre in Orkney, which has contributed over £300 million to the UK economy and supported over 200 jobs.

I call on the UK Government to listen to Scotland’s plea for the promises to be delivered and I call on this Parliament to agree that the UK shared prosperity fund falls far short of what we were promised and fails to offer the level of autonomy and influence that the Scottish Government experienced under the EU. We must have a full and equal role in determining how funds are used. We must have confirmation that Scotland’s allocation of the shared prosperity fund matches our lost EU funding.

I move,

That the Parliament agrees that the UK Government’s proposed arrangements for the UK Shared Prosperity Fund (UKSPF) are more restrictive than the EU Structural Funds and fail to offer the level of autonomy and influence that the Scottish Government experienced under the EU; believes that the Scottish Government must have an equal role in determining how these funds are used; notes with concern a cross-party report from the Treasury Committee, which estimates that the total value of the UKSPF up to 2024-25 is a 40% reduction on the amount that the UK received under EU structural funds from 2014 to 2020; calls on the UK Government to urgently confirm that Scotland’s allocation of the UKSPF matches its lost EU funding, as promised by the UK Government, given the absence of assurances in the Levelling Up white paper; believes that at least £183 million each year is required to deliver this, and calls for the UKSPF to be fully aligned behind the just transition to a net zero economy.

Photo of Elizabeth Smith Elizabeth Smith Conservative

I begin by reiterating the belief on the Conservative benches that, in the post-Brexit era, the UK Government must make every effort to ensure that there is absolutely no loss to the devolved nations of funding that is equivalent to the money that we would have had, had we still been part of the EU. Whether it is via the community renewal fund, the levelling up fund or the shared prosperity fund, it is vital that there is at least equivalent funding for the loss of the EU structural funds. In other words, and to adopt one of the principles of the Smith commission, there must be no detriment.

For me, three things matter in this whole debate: first, that the absolute best interests of Scotland, most especially in terms of improving our economic performance, are met; secondly, that our local authorities and communities—which, for such a long time, have asked for more autonomy—feel more empowered; and thirdly, that there is a joined-up approach between Westminster, the Scottish Government and local authorities.

Last week, the Finance and Public Administration Committee took evidence from the Secretary of State for Levelling Up, Housing and Communities, Michael Gove, and that was an important session, during which members could address their understandable concerns about the details of replacement funding. Earlier this afternoon, during the debate on the internal market, we had an opportunity to debate more of those issues.

We know that the United Kingdom Internal Market Act 2020 confers a right on Westminster to spend money in the aspects of the UK for which it does not have devolved competence—for example, on infrastructure projects such as roads or railways. The aim is to provide additional investment, but there are some—and I hear them on the benches on my right—who feel that the 2020 act is an all-out attack on devolution, a power grab of unlimited proportion and something that Scotland can well do without.

Photo of Daniel Johnson Daniel Johnson Labour

Although I acknowledge what Liz Smith is saying in this debate, when Mr Gove appeared before the committee, she pursued a very interesting line of questioning about co-ordination. We have very clear goals set out in places such as the national performance framework and there is a risk that this funding is somehow out of alignment with some of those goals, so there is a need for co-ordination. Will Liz Smith reflect on that? What are her thoughts about improving the co-ordination of these funds?

Photo of Elizabeth Smith Elizabeth Smith Conservative

There are two points, and the first is about co-operation; it is essential that there is proper co-operation. Mr Gove gave a full commitment that, if any of us feel that that co-operation is not happening, he will address that as soon as possible. The cabinet secretary has just referred to the fact that he has had engagement with Scotland Office ministers, who are saying exactly the same thing. The second issue, which is also relevant, is the statistical evidence that relates to the performance framework and how the Scottish Government’s ambitions articulate with those of the UK Government. That is a very important issue, which both Mr Johnson and I were pursuing at the committee meeting.

As we debate this crucial issue, it is vital that we are cognisant not only of the fact that there are clearly set out devolved responsibilities but of the fact that aspects of devolution go further down the line to our local government and local authorities, which want a greater say in how that money is spent. Mr Lochhead referenced some of the spending that has already happened in his constituency of Moray, and that is vitally important. If we measure what is happening now in the levelling up work, we see that some really good programmes are giving additional money, which is on top of anything that would come from Barnett consequentials. It is giving us that additional say, and that is extremely important.

I will deal with a few of the criticisms that have been made, particularly in relation to the comment that Mr Lochhead made about what the Treasury Committee and the Welsh Government said about their concerns that the replacement funds are not the full £183 million that would have been Scotland’s share. I acknowledge to Mr Lochhead that there would be some concern about that if it were not for the fact that the EU funds are being replaced, and not just by the shared prosperity fund. It is correct that EU funding is still taking place in Scotland, but it will diminish as time goes on, and Mr Gove has given a very full commitment that funding will be ramped up as that EU funding diminishes. The key point is that if, at any stage, there was a hint that we were not getting money on the same basis as when we were in the EU, that would be a very fair criticism.

The Scottish Government is saying that the 2020 act is an attack on devolution, but I do not accept that. When it came to the Tay cities deal in my region, there was excellent co-operation between the Westminster Government, the Scottish Government, local authorities and stakeholders. It is about making sure that our local communities, who know their areas best, have the facility to be able to direct funding in a way that is of the most benefit to their particular economies.

There are issues with some of the modelling that is used to decide on how the funding will be applied, but I do not accept that there is a deliberate undermining of what has to be spent in Scotland. There is some scope for change when making sure that the data that is used and interrogated by the Office for National Statistics applies to both the Scottish and UK objectives.

I move amendment S6M-03393.1, to leave out from “agrees” to end and insert:

“warmly welcomes the UK Government’s commitment to level up every part of the UK and the commitment provided by the Secretary of State for Levelling Up, Housing and Communities, The Rt Hon Michael Gove MP, that Scotland’s share of the UK Government’s Shared Prosperity Fund, worth £2.6 billion over the next three years, will at least match the level of EU funds it is replacing; agrees with local authorities across Scotland, which have commended the UK Government for directly funding levelling up projects in their local areas, bringing much-needed investment and employment, and calls on the UK Government, the Scottish Government and local authorities to continue to work together to ensure the effective delivery of future projects.”

The Deputy Presiding Officer:

I call Paul Sweeney to speak to and move amendment 3393.2.

Photo of Paul Sweeney Paul Sweeney Labour

The debate on the UK’s shared prosperity fund is long overdue. Since the Brexit vote in 2016, questions have frequently been asked about what would replace the EU’s structural funds. Despite repeated assurances that a replacement would appear, many of us were sceptical about whether it ever would.

Let us start on a point of consensus and welcome the fact that the detail has finally appeared. However, I fear that that is where the consensus will end, because the reality is that the detail far from matches the rhetoric that we heard in the run-up to the announcements. The rhetoric was that the UK prosperity fund would at least match the level of EU funds that it replaces; in fact, the Conservative amendment states exactly that. The reality is that it is 40 per cent less than the EU funds that it is replacing. The Treasury Committee in the House of Commons

Photo of Elizabeth Smith Elizabeth Smith Conservative

I thank the member for giving way. Does he accept that, as it stands, there is some existing EU money in Scotland? We need to ensure that, as that diminishes—which it will over time—the rest of the funding that will come from the UK Government’s shared prosperity fund and other structural funds is ramped up. Michael Gove gave a very firm commitment on that.

Photo of Paul Sweeney Paul Sweeney Labour

I hear the member’s point, but I do not agree with her perception or assertion. Even the Treasury Committee in the House of Commons said as much in its report on the funds, which questioned why one of the centrepieces of the Government’s levelling up ambitions was to be reduced to such an extent. The idea that there will be a complete offsetting is simply not correct.

It is not just the Treasury Committee that is calling that out. The Scottish Government, the Welsh Government, the Northern Irish Government, the Northern Powerhouse Partnership and the metro mayors are all saying the same thing, and they cannot all be incorrect. They will be worse off, and that is not acceptable.

As usual, ordinary working people will pay the price. We are already seeing gross inequalities across our country: one in four children lives in poverty; almost a quarter of all households live in fuel poverty; life expectancy in our poorest communities is now falling; and food bank use is rising. Each of those are symptoms of political choices. It beggars belief that, after 12 years of Tory austerity, the party’s failed macroeconomic policy of public disinvestment and resultant low economic growth is set to continue.

It is also true to say that the Scottish Government has been asleep at the wheel on this, too. In the SNP’s time in office, council budgets have been slashed every year. There has been a laissez-faire approach to Scotland’s economy and the productivity rate is drastically lagging behind the Organisation for Economic Co-operation and Development average. EU structural funds and regional selective assistance have been potentially misallocated and inefficiently managed through the enterprise agencies. The Scottish Government has shown a timid acceptance of Tory laissez-faire economics and has failed to develop an industrial strategy that would provide high-quality and high-paid jobs for people in every town and city across the country.

The point about council funding being absent from the Government’s motion is particularly important to the debate. We know that Scotland’s councils have borne the brunt of funding cuts: £250 million has been cut this year alone. I have concerns about the UK Government’s approach to providing funds directly to local authorities, bypassing the Scottish Government entirely.

Labour believes fundamentally in empowering local communities. That means providing them not only with adequate funding but with the powers to make their own choices. We have a devolution settlement in place, but the Tory plan quite clearly circumvents it, meaning that we simply cannot support that method of delivery.

I, too, want to touch on the issue of co-operation. We know that the Scottish and UK Governments hold colossal differences of opinion on a whole host of policy areas, but we really need them to work together in the national interest on the funding issue.

If the UK shared prosperity fund is provide the same benefits as were provided by the EU structural funds that it is replacing, I would argue that how those funds are delivered is of fundamental importance. We simply cannot have a situation in which both Governments incessantly argue, as they have done on issues such as city deals, including about who gave the money to who and what flag should appear on billboards and at construction sites. Sadly, I think that that is exactly what is about to happen. I am sure that we will be subjected to those tedious arguments during the debate. Frankly, that is not good enough.

As the Scottish Parliament information centre’s report articulates, the longer it takes the UK Government to bring in the shared prosperity fund, the more questions will be asked about any costly gaps in funding. Stakeholders and beneficiaries who may have been waiting since 2017 to know how the UK shared prosperity fund will operate are being forced to bide their time for a while more. My plea to both the Scottish and UK Governments is quite straightforward: grow up, work together in the best interests of people across Scotland and begin to match the incessant levels of facile rhetoric with tangible actions.

I move amendment S6M-03393.2, to leave out from “agrees” to end and insert:

“recognises that the UK Government’s proposed arrangements for the UK Shared Prosperity Fund circumvent the devolved settlement; notes that there are increasing regional inequalities across Scotland, including in health, child poverty, income and economic opportunities, which neither the UK Government nor the Scottish Government is adequately tackling; regrets that Scotland’s progress in closing the gap in productivity levels with the UK average has been halted during the last decade; understands that the voluntary sector has highlighted the potential loss of funding compared with previous years and has called for certainty around funding and delivery; notes that both the Scottish and UK governments have a record of centralising control and decision-making on the delivery of funding, and believes that decisions around addressing regional inequalities are best made in the regions and communities where support is needed; calls, therefore, for the Scottish Government to deliver adequate funding for local authorities, and further calls for the UK and Scottish governments to work together constructively to take the urgent action needed to address the regional inequalities in Scotland, and ensure that communities across Scotland receive the additional support and funding that they desperately need.”

Photo of Willie Rennie Willie Rennie Liberal Democrat

As is often the case, Liz Smith made a reasonable and constructive contribution to the debate. She focused on the practical steps that need to be taken and, indeed, challenged her own Government to match the commitments and the promises that it has made in the past on the level of funds. However, at best, there is confusion over the level of funds; at worst, there is a potential cut of hundreds of millions of pounds.

Between 2014 and 2020, the annual contribution from the EU structural funds was about £2,000 million a year. The National Council for Voluntary Organisations in England estimates that the shared prosperity fund will provide only £866 million, which is a cut of £1.1 billion a year. The minister referred to the Treasury Committee report and a cut of 40 per cent. What would be the impact of the worst-case scenario on projects across the UK? I say to the minister that this is not just a Scottish issue; it is a UK-wide issue.

It is almost six years since the Scottish independence referendum and two years since we left the EU, but still the Conservative Government has not worked out what it is doing. It is moving far too slowly, which is causing massive uncertainty in the sector and organisations face a funding cliff edge as a result. Jobs are at risk, as is the vital work that those organisations do.

Pre-launch guidance on the shared prosperity fund was issued only last month, further details will not be available for weeks and it will take months for applications to be submitted and processed, even though existing funds will run out by December. I say to Liz Smith that time is marching on. The Conservative Government must speed up and end the uncertainty.

There is also great doubt about the role of funds in skills development. At a time when we are short of sufficient skilled workers, that is incredibly short-sighted. The SNP Government is in danger of focusing solely on its exclusion from the process, while organisations across the country are primarily concerned about the shortfall in funding and the lack of certainty.

I want partnership and co-operation. I believe in federalism. That is the answer to the problems that we are facing over this and many other post-Brexit issues that we have been debating today. I would argue that we should have the structures of engagement in areas of common interest. The shared prosperity fund is one area that would benefit from a partnership approach.

I think that most people in this country want Governments just to get on. They want them to work together in partnership, put aside the constitutional differences and make things work. They need to do that in partnership with local authorities, and spats over who is in charge are completely irrelevant to most people on the ground, especially when jobs and opportunities are at stake. Paul Sweeney was bang-on with his comments on that.

I urge the Conservative Government to establish a joint council for UK shared prosperity for the fund and the levelling-up agenda. The council would include representatives of the constituent authorities of the United Kingdom. It could work in partnership with local communities and local government on the development of programmes.

Let us draw on the skills, expertise and talents of everyone at every level of government to make a success of the funding. Let us end the uncertainty over the level of funding, and make sure that the jobs are saved and the opportunities are seized.

The Deputy Presiding Officer:

We move to the open debate. I advise members that there is no time in hand, so any interventions that they might wish to accept must be accommodated within their allotted time.

Photo of Michelle Thomson Michelle Thomson Scottish National Party

I have not forgotten that it was an utterly disingenuous vote leave campaign led by Michael Gove and Boris Johnson that has led Scotland to this point. Although I await further developments with interest, as it stands, the UK structural funds are a mess.

As I see it, there are five summary issues. First, there has not been—and I still have limited confidence that there will be—any meaningful engagement with the democratically elected Scottish Government to ensure that the funds are compatible with Scotland’s economic policies. Secondly, there is no effective governance in place. For example, there is no sensible approach to a nationwide evaluation of impact. It would seem that, in place of robust governance, we are to have Mr Gove whispering “Trust me”.

Thirdly, the methodology that is in place for categorising areas of need is, at best, amateurish. Fourthly, the UK funds set up a competition in which our local authorities must compete with one another, rather than work in concert towards nationally agreed goals. Fifthly, the most sensible solution was readily available, but for political reasons it was rejected—to continue with the precedent that was already set by EU structural funds and allow our Scottish Government and those of us in this Parliament to shape the best use of funds for the people of Scotland.

When I challenged Mr Gove in the Finance and Public Administration Committee last week about the methodology for funding projects, which had placed Orkney, Shetland and the Highlands in the lowest category of need for transport infrastructure—along with the City of London—he obfuscated. He asked the Scottish Government to provide him with more information and transparency, while at the same time he sought to impose an approach that excludes that Government from control.

Let us consider Mr Grove’s track record on transparency. As reported in 2017 by Peter Geoghegan, writing for openDemocracy, Gove and others were closely tied to the Legatum Institute, a Mayfair-based think tank that is funded by a tycoon who made his money during the wild capitalism period in post-Soviet Russia. When asked about his connections to people at Legatum, Mr Gove’s belief in transparency led him to give this florid reply:

“The blessed sponge of amnesia wipes the memory slate clean.”

However bad his memory was, it did not stop the appointment of Legatum’s Matthew Elliott as chief executive of vote leave.

After the referendum, the infamous letter from Gove and Boris Johnson to the then Prime Minister, Theresa May, encouraging a hard Brexit, was widely reported as having been assisted by the involvement of Russian-funded Legatum personnel. Gove and Johnson’s hard Brexit is costing Scotland dear.

Furthermore, Gove advocated against and lobbied to avoid publishing prior to the 2019 election the Russia report on election meddling, money laundering, cyberattacks and the buying of influence with dirty Russian money. To this day, we have never seen the full report, thanks to Mr Gove.

Finally, I note that the tycoon who is behind Michael Gove’s favourite institute is reported to have been behind the board coup that saw an associate of Vladimir Putin become chair of Gazprom, the huge energy company that is fuelling Putin’s war in Ukraine.

Therefore, no amount of fawning by the Scottish Tories over Gove can hide the fact that he is a charlatan with a demonstrable lack of concern for the democratic will of the Scottish people—trust him, and his assurances on the UK structural funds, at your peril.

Photo of Murdo Fraser Murdo Fraser Conservative

Perhaps we can get back to the subject of the debate: the UK shared prosperity fund, which is a very welcome part of the UK Government’s levelling up agenda. Despite what we have heard from Scottish National Party members this afternoon, the approach has been warmly welcomed and embraced across Scotland.

The starting point for the discussion is that Scotland has two Governments: a Government here in Edinburgh and another Government in London. Both of them have a crucial role in supporting infrastructure, helping communities to grow and assisting with economic growth right across the United Kingdom. We see that already in the successful roll-out of the city growth deals, which now cover every single part of Scotland. Those now involve a total investment of £1.49 billion, with projects such as the new concert hall for Edinburgh, the national tartan centre in Stirling, and the Net Zero Technology Centre in Aberdeen.

On top of that, we have just seen the announcement of two new free ports in Scotland backed by £52 million; a £4.8 billion infrastructure investment in towns via the levelling up fund; and a £2.6 billion shared prosperity fund, which provides cash directly to councils to replace EU funds. Every single one of those programmes is good news for the UK and for Scotland, and they should be warmly welcomed by everyone in this chamber.

The UK Government made a commitment to replace EU funding, which of course is what the levelling up fund will do. As Liz Smith pointed out, we still have EU legacy funding, which will diminish over time, and the shared prosperity fund will ramp up to fill that gap. Scotland will receive more in EU replacement funds than it ever received directly from the EU. Again, we should celebrate that.

It is curious that we hear so many complaints from the SNP about the funding. SNP members never complained when the funding came from the EU but, suddenly, when it comes from the UK, they are full of complaints.

Photo of Daniel Johnson Daniel Johnson Labour

Does the member have any evidence that the funding will match that from the EU, or will we just have to take on good faith what Michael Gove and others have said?

Photo of Murdo Fraser Murdo Fraser Conservative

I am disappointed that Mr Johnson, who considers himself to be a supporter of the United Kingdom, is not taking the United Kingdom Government at its word when it says that more money will be forthcoming. He should have more confidence in the United Kingdom Government. I say to him and in particular to those on the SNP benches who talk about EU funding and suggest that it was all sweetness and light and there were no problems that, this time last year, the Scottish Government was facing a fine of £190 million due to irregularities over the European social fund and European regional development fund. Earlier, I asked the minister what has happened to that fine, how much has been paid and what its status is. Perhaps in his winding up speech, he can confirm the answers to those questions.

The proposals are welcome. Even SNP councillors have welcomed the money. Councillor Iain Nicolson of Renfrewshire Council, which is to receive the single largest investment from the levelling up funds of £38 million, said that he was “delighted” to receive the money. What a pity that that enthusiasm is not reflected among his parliamentary colleagues here in the chamber.

Crucially, the money goes directly to local councils. What a difference in approach from the UK Conservative Government compared to the approach of the SNP Government here. The SNP Government is treating councils in Scotland woefully by cutting their funding year after year while expecting them to do more and more. The SNP claims to be a party of localism but, in practice, it treats our local councils as whipping boys.

In contrast, the Conservative Government in Westminster trusts our local councils, works with them and is making sure that they get the money that they need. That is why the shared prosperity fund is so welcome and it is why SNP members are so hostile to it—they do not like local government being empowered. That is why we support the amendment in the name of Liz Smith.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

I first wish to record my disappointment that such a short time has been allocated for an issue of such importance. That means that a full explanation of the relevant matters is not possible, but I will touch on a few of them.

When the UK was in the European Union, Scotland was allocated €944 million in structural funding under the 2014 to 2020 budget framework. To be unlocked, the funding had to be matched by the UK Government, which led to investment of about £183 million a year. The question remains: will the UK Government make good on the EU funding that we will no longer receive?

In 2017, the Tories committed to setting up a replacement structure called the UK shared prosperity fund, but no progress was made for years, as self-imposed deadlines came and went. It is telling that the UK Government found time to push through its internal market bill in 2020 without consulting the Scottish Parliament. That contravened the Sewel convention, as the UK Government afforded itself powers to undermine the Scottish Parliament and the Scottish Government on devolved matters, which MSPs are elected to deliver on.

When the levelling up fund was announced in March 2021, it was immediately clear that there would be an enormous cash shortfall. Despite repeated calls by Scottish ministers and SNP MPs, no detail was revealed until the 2021 autumn statement.

On 27 January, Westminster’s Treasury Committee, which is chaired by Tory MP Mel Stride, reported that, up to 2024-25, the UK shared prosperity fund will suffer a 40 per cent annual cut compared with EU structural funding. That is worrying as we emerge from the pandemic and the impact of Brexit.

Last week, we welcomed the Secretary of State for Levelling Up, Housing and Communities and Minister for Intergovernmental Relations, Michael Gove MP, to the Finance and Public Administration Committee. We had hoped to see Mr Gove back in November. However, once he found the time to come to Holyrood on the back of his address to the Convention of Scottish Local Authorities, he was very forthcoming, which made our session most valuable.

When I asked why the Treasury Committee had expressed such great concerns, Mr Gove responded by saying:

“The inference that I would draw is that it is a perfectly legitimate misunderstanding to conflate the UK shared prosperity fund money with previous EU funding”—[Official Report, Finance and Public Administration Committee, 24 February 2022; c 2.]

He argued, rather vaguely and somewhat unconvincingly—he did not convince a Tory-led Westminster committee after all—that, alongside the UK shared prosperity fund, resources would be delivered from sources such as the levelling up fund, and that Scotland would, overall, see no loss. The bottom line is that our committee still awaits details on where the £183 million per year will come from.

Scottish ministers have not been consulted, nor do they have any role in decisions on investment proposals relating to devolved matters. New guidance offers no evidence of devolution being respected and no acknowledgement of the Scottish Government as an equal partner. As part of his “It’ll be all right on the night” approach, Mr Gove said:

“It is explicitly the case that, for the UK shared prosperity fund, we want to ensure that there is intensive dialogue between us and the Scottish Government and its ministers on the basis on which the money should be distributed.”—[Official Report, Finance and Public Administration Committee, 24 February 2022; c 3.]

No reason was given as to why such dialogue has not yet taken place.

I raised the specific case of the European Marine Energy Centre in Orkney, which is the world’s first and only accredited wave and tidal test centre for marine energy. Over 16 years, EMEC has contributed £306 million to the UK economy, supporting almost 200 jobs. Between 2016 and 2020, it received more than £17.4 million—52 per cent of its total funding—from Europe. EMEC felt compelled to express its concern that the levelling up white paper, which was published on 2 February, suggests that the UK shared prosperity fund will be allocated entirely through local authorities. The deliberate bypassing of the Scottish Parliament, with funding going straight to councils, creates a real risk that EMEC and other unique organisations that are crucial to innovation and addressing climate change will miss out on vital funding. Such anomalies seemed to surprise Mr Gove, who committed to speaking to EMEC. However, his policy making on the hoof approach is not a sustainable way of operating the funds as it lacks the practical set-up and security of EU structural funding.

Although I welcome the secretary of state’s clarifications, we are still to see cold hard numbers that confirm that Scotland will not lose out. Scottish and Welsh ministers have also not been adequately consulted on a fund that goes live next month. The UK Government must actively engage, and it must do so today.

Photo of Rhoda Grant Rhoda Grant Labour

The benefit of EU structural and social funds was a game changer in the Highlands and Islands. Communities were inspired to grow and develop, and the funding was used to build bridges, causeways, roads and factories. Communities were linked and given the tools to lead them to prosperity. In the Highlands and Islands, there was scarcely a road built in the 1990s and early 2000s that did not have an EU flag beside it. The funding made a huge change and, for once, shone a light on some of the most marginalised communities in the country.

Sadly, when the SNP Government came to power, it quickly took control of the fund from local organisations, and the impact decreased markedly. Its obsession with centralisation diluted the impact.

Following Brexit, those funds are now being removed altogether, and the replacement that is being offered by the UK Government is absolutely blind to peripherality.

Although we have sparse populations and poor transport links in the Highlands and Islands, not one of our council areas attracts level 1 funding. Although areas of extreme poverty exist in Orkney, Shetland and the Western Isles, where people depend on ferries and flights to get to the rest of the country, those regions find themselves in level 3 alongside areas such as Buckinghamshire and Cambridge. That is senseless.

I wrote to Michael Gove to try to get him to understand the situation, telling him that rural poverty and deprivation do not show up easily in the indicators that both the Scottish Government and the UK Government use, which are largely postcode based.

In rural areas, the poor live side by side with the very rich, so the real disadvantage that those communities face is hidden. In the Highlands, that disadvantage is further hidden due to the success of some parts of Inverness. Despite that success, a decade’s difference in life expectancy exists there depending on which direction I walk in from my house for 15 minutes. People who live within walking distance of each other can have markedly different life chances.

Outside Inverness, throughout the Highlands and Islands, disadvantage manifests itself through depopulation. Although many areas are extremely fragile because our young people are forced out to seek employment and housing, the whole region is termed level 2 or 3.

I believe that the UK Government has a real opportunity to make a difference by using the levelling up fund in a way that would demonstrate an understanding of remote rural communities. Our area provides opportunities for the rest of the country. We are the lungs of the country with our wide-open spaces, and we are set to become the generator of energy, too, yet we struggle for survival.

The funding provides an opportunity to level up our society, but unfortunately it looks like it is there to provide sweeteners for parts of the country that voted Conservative for the first time—an attempt to buy their loyalty while doing down our most peripheral regions.

I appeal to both our Governments to recognise the needs of rural communities and find a better way to reflect their needs. If they do not, those communities are likely to disappear. Those communities are best able to understand their own needs, but they need to be empowered and be given the funds to allow them to build up and repopulate. Those areas will grow and flourish if we recognise their needs. This is not a time for political opportunism; it is a time for action.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

I welcome the debate. I also welcome investment in my Greenock and Inverclyde constituency and in Scotland. I would like to see more of it, and I am quite sure that others across the chamber would like to see more going into their constituencies, too.

The fact that there is a so-called shared prosperity fund and a so-called levelling-up fund and agenda highlights that successive UK Governments, irrespective of whoever has been in power at Westminster, have financially hammered Scotland and the north of England. It shows that the union has not worked for Scotland. At least we, in Scotland, have a chance to change that situation. I look forward to the day when we win our next independence referendum.

Whether or not MSPs across the chamber accept it, we all know that Scotland has never been at the top of the agenda at Westminster. Margaret Thatcher had plans to cut Scotland’s budget and tried to keep those cuts “invisible” while putting thousands of shipyard and engineering jobs in my constituency, as well as the steel and coal jobs across Scotland and parts of England and Wales, on the scrap heap. Tony Blair was content to allegedly keep public spending higher in Scotland per head because he saw it as a price worth paying to maintain the union. Boris Johnson said that his “argument to the Treasury” was

“that a pound spent in Croydon is far more of value to the country, on a strict utilitarian calculus, than a pound spent in Strathclyde.”

He added that

“you would generate jobs and growth in Strathclyde far more effectively if you invest in Hackney or in Croydon or other parts of London”.

I make no apologies for not rolling out the red carpet for the current Tory UK Government and its so-called generosity through various funds that it is now considering for Scotland and elsewhere in these islands. I am not prepared to beg for the crumbs off the table when the disrespect agenda that the UK establishment has had for Scotland is there for all to see and has been for many generations.

After the Brexit referendum, which resulted in Scotland being dragged out of the EU against its will, the then Prime Minister, Theresa May, met the First Minister to discuss a variety of issues. One of the key matters reported at the time was the Prime Minister’s admission that the UK Government could not match the funds that the EU was providing. In effect, therefore, we are suffering the double whammy of being dragged out of the EU against our will and being short-changed to the sum of £183 million per annum. No matter how the UK Government tries to spin it, the new funds that are being debated today will not come anywhere near the sums of money that have been cut from Scotland over many generations.

According to the New Philanthropy Capital think tank in January, the £4.8 billion levelling-up fund that was announced at Westminster’s spending review last March aims to

“invest in infrastructure that improves everyday life across the UK.”

In Scotland, the 20 per cent of local authorities that have the highest homelessness rates received less levelling-up funding than the 20 per cent of local authorities with the lowest homelessness rates. Of the 20 per cent of local authorities with the highest homelessness rates in Scotland, three have received no levelling up funding. Meanwhile, of the 20 per cent most deprived local authorities, four—Inverclyde Council, North Lanarkshire Council, Dundee City Council and East Ayrshire Council—have received no levelling up funding.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

No.

In addition, the amount of allocated funding per head is less than it is in England.

Ultimately, I will welcome investment when and if it comes to Inverclyde. It is long, long overdue but it is also another example of Westminster’s centralisation agenda and how it is trampling all over devolution. It is the disrespect agenda writ large. The Westminster power grab is happening. We are witnessing it with the so-called levelling up and the so-called UK shared prosperity fund.

Last week, Michael Gove indicated to the Finance and Public Administration Committee how his Government will engage in devolved areas. Sharing prosperity is not something that happens in one parliamentary term, especially when we bear in mind the fact that Westminster has been removing opportunities from Scotland for generations.

The Presiding Officer:

Please conclude, Mr McMillan.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

The sooner we are out of it, the better.

Photo of Maggie Chapman Maggie Chapman Green

The UK Government’s proposed arrangements for the UK shared prosperity fund tell us three things.

First, the UK Government has little interest in keeping the Conservative Party’s 2019 manifesto commitment that it would “at a minimum” match the level of EU spending. What we see being proposed is a mere 40 per cent of what was provided by the European Union structural funds. I know that we are all becoming accustomed to the Prime Minister’s broken promises, but that is bad for communities and bad for trust in politics.

Secondly, the UK Government also has little interest in respecting devolution or enhancing community participation and engagement in decision making. Even though money will be spent on matters that fall within devolved competencies, such as transport, skills and economic development, the Scottish Government and our communities have little, if any, say in allocation decisions. That is worrying, given how different the economic development landscape is in Scotland compared to the rest of the UK, never mind what it says about devolution.

Thirdly, we will have to work even harder than we did before to tackle the inequalities that exist across and within different parts of Scotland and reorient our economy towards wellbeing and the just transition.

Last summer, the Institute for Government published a report on the UKSPF, highlighting key risks of the UK Government’s approach that included fragmentation of service provision, confused accountability, duplication of effort, funding uncertainty and increased intergovernmental tensions. The same report set out several recommendations to mitigate those risks: clear allocation criteria; reduced bureaucracy—the irony of a Brexiteer Government talking about additional red tape is not lost on me; better consultation with and engagement of devolved nations; genuine partnership working; match funding models; clarification of governance and operational management; and more. To date, nothing that we have seen from the UK Government addresses any of those matters.

A fundamental problem with the UK’s economy during the past 40-plus years has been a deep-seated reluctance to invest in the infrastructure that we need for the wellbeing of our citizens. It has been worse in England, where, for example, privatised water companies have paid massive dividends to shareholders while allowing the water and sewerage systems to degrade.

We desperately need more money for infrastructure—for investment in our future—including in the telecommunications on which much of our lives will be based through high-speed broadband, on which we lag behind many countries. We need the energy and storage investment to wean ourselves off fossil fuels, as has become painfully obvious over the past year, with exponentially rising fossil fuel costs.

What we have here, however, is a drastic cut to the funds that we would have received through the EU. Many people voted for Brexit because they thought that it would mean more investment in the fabric that our society relies on. It is clear that the leaders of the Brexit campaign had no interest in keeping their promises, but it is vital that we do not repeat the failure so that those people are failed twice.

Public borrowing is still cheap, and we can build the houses, the railways and the high-speed broadband that we need. We can support genuine community regeneration that recognises local variations and specificities by having governance and engagement structures that centre local voices. Yet the UK Tory Government insists—yet again—on impoverishing us, now and in the future. I can only speculate why, but I know that we cannot afford it now, and we certainly cannot afford it in the future.

Photo of Alison Johnstone Alison Johnstone Green

Miles Briggs will be the last member to speak in the open debate.

Photo of Miles Briggs Miles Briggs Conservative

It was perhaps a mistake of the Minister for Parliamentary Business to timetable the two debates that we have had this afternoon together, the first one being on the Local Government Finance (Scotland) Order 2022, with SNP and Green ministers cutting £250 million from local authorities, and the second being this debate on measures that will give local authorities powers and resources, with an additional £2.6 billion of funding.

The shared prosperity fund is a central pillar of the UK Government’s ambitious levelling-up agenda and a significant component of its support for communities across Britain. The fund will provide £2.6 billion in new local investment by March 2025, with all areas of the UK receiving an allocation from the fund via a funding formula rather than a competition.

The purpose of the shared prosperity fund and the UK Government’s levelling-up agenda is to reduce inequalities where they occur anywhere in Britain. I would have thought that all of us would agree about that. That applies equally to Scotland as to any other nation or region of the United Kingdom. I hope that SNP and Green ministers and MSPs agree with many of the principles that the UK shared prosperity fund focuses on—for example, investment and resources being targeted to areas of Scotland that are less prosperous, and working to build stronger, safer and more prosperous communities for all of us.

Projects such as the restoration of the B-listed Granton gas holder in my region, for example, are designed to spread opportunities and improve public services and to restore a sense of community, local pride and belonging as well as to empower local leaders and our communities. At the very time when SNP and Green ministers are cutting local budgets, the UK Government is looking to inject finances directly into areas around the country that need them the most.

I have already outlined this, but I note that the Scottish Government’s motion does not even mention local government and the important role that councils must play in helping to improve and empower communities across our country. Perhaps that is at the heart of what SNP and Green ministers and MSPs are complaining about today—that what we are actually seeing is powers going to local authorities, not to SNP and Green ministers.

The Scottish Conservatives support initiatives that move towards greater local empowerment, and I believe that the shared prosperity fund can help to deliver that very outcome. Scottish local authorities are receptive to making bids to the shared prosperity fund as well as to the levelling up agenda. I know that COSLA has already had many positive engagements with Michael Gove on how that can best be achieved.

The UK Government has made it very clear that it wants to work with the Scottish Government to make the best possible use of the funding across Scotland. I hope that members’ attitudes change so that we can see that happen. As has been stated, local authorities across Scotland are receiving their share of the £172 million in the first tranche of investment. I sincerely hope that SNP and Green ministers will start to get on board with the delivery of the UK shared prosperity fund and will start a positive engagement with all our communities and our councillors who are elected after May’s elections, to get the best possible outcome for all our communities.

Communities across Scotland have a proud record of coming together—[Interruption.] Sorry, but does Christine Grahame want to intervene?

The Presiding Officer:

Christine Grahame.

Photo of Christine Grahame Christine Grahame Scottish National Party

I was talking to myself, but, if the member wants me to talk to him, I am quite happy to do that.

The core issue is that this approach is bypassing the devolved settlement. That is the basis of it. Those at Westminster are choosing which local authorities to send their money to—and they just happen to be places where they are looking for votes. [Applause.]

Photo of Miles Briggs Miles Briggs Conservative

I disagree with that point. The real question, which many members who are clapping need to think about, is what the SNP has actually done in the past 14 years to bring prosperity to communities. The answer is nothing at all.

Communities across Scotland have a proud record of coming together to pioneer innovative work to deliver community regeneration projects. That is what we need to help to achieve. It is vital that we realise the potential of all our communities, and the shared prosperity fund will help to achieve that. I support the amendment in Liz Smith’s name.

The Presiding Officer:

We move to closing speeches.

Photo of Daniel Johnson Daniel Johnson Labour

The structural funds have played an important role in Scotland. Paul Sweeney set out very well why they have been important and why their replacement is long awaited.

An important point that has been missed in many contributions is that Scotland remains a country of inequalities. As Paul Sweeney pointed out, a person’s life chances and ability to earn can be very different, depending on where they live. There is a 40 per cent gap between the highest productivity rate in Scotland, in Edinburgh, and the lowest, in the Western Isles. That is not sustainable. Although I have a huge number of criticisms of what the Conservative Government has proposed, I have yet to hear a response from the Scottish Government on what it is doing to target those regional inequalities.

Ultimately, the proposed funds fall short, in terms of both how they are structured and their quantum. As Paul Sweeney pointed out, they are 40 per cent less than the EU structural funds that they replace.

I perhaps admire Murdo Fraser’s choice of tie, but that is the limit of my admiration this afternoon. What he presented was nothing short of chutzpah. Am I to take it on Michael Gove’s word, because he is a minister of the Crown, that more money is coming? According to Murdo Fraser’s remarks, apparently the Conservatives are the champions of local government and local democracy, despite the fact that they cut local authorities’ funding by 40 per cent in England. We should take no lectures from the Conservatives on local government funding whatsoever.

The most important contributions came perhaps from my colleague Rhoda Grant and Michelle Thomson. When we look at the detail of how the funds have been structured and how the indexation has been put together to come up with a system whereby the Highlands and Islands is in the same category as Buckinghamshire, we surely know that something is very wrong.

Although I very much enjoyed Michael Gove’s contribution at the committee on Thursday, what he said was very much, “This is a work in progress—don’t worry, we will look at it. Yes, I know that these measures are very narrow, but they will be improved.” As somebody put it, it was very much, “It’ll be all right on the night.”

Photo of Elizabeth Smith Elizabeth Smith Conservative

Does Mr Johnson recognise that Mr Gove accepted that there could be issues with some of the modelling? There has not been a deliberate attempt to try to deny particular funding to specific areas. If we have issues about the modelling and it is not as objective as it could be, we are to go back to him with clear examples of where there might be problems.

Photo of Daniel Johnson Daniel Johnson Labour

Liz Smith accurately represents what was said, but given the significance and importance of what the funds are supposed to deliver, the fact that they are still, in essence, a work in progress is deeply troubling and exposes the flawed and, frankly, hurried nature of how they have been put together.

Along with others, I have deep concerns about the lack of co-ordination. Liz Smith put it very well in committee when she said that if there is not co-ordination on the measures that are used to look at the funds and co-ordination with other priorities, we run the very real risk of Governments making incompatible and divergent efforts. I am concerned by the eagerness of some members to draw out the constitutional arguments, but the co-ordination points are far too easily glossed over by members on the Conservative benches.

Ultimately, the debate was best summed up by Willie Rennie. Six years on, surely we should expect more. We need more clarity but, ultimately, we just want our Governments to get on and deliver. I do not think that that is too much to ask.

The Presiding Officer:

I call Donald Cameron.

Photo of Donald Cameron Donald Cameron Conservative

Thank you, Presiding Officer. [Interruption.] Once Willie Rennie has stopped telling jokes—

Photo of Donald Cameron Donald Cameron Conservative

He was applauding himself.

The minister spoke about meeting Neil O’Brien. In my view, Neil O’Brien is one of the most thoughtful and intelligent ministers in the UK Government, and he is in the Department for Levelling Up, Housing and Communities. I hope—I say this with the best of intentions—that he treats those ministerial relations well, because I think that he is a rising star.

I associate myself with the remarks of Liz Smith, who stated unequivocally that there are three things that really matter here: the very best interests of Scotland, particularly in relation to our economic recovery; the empowerment of our local authorities; and that the need is met for proper, realistic, joined-up work between the UK Government, the Scottish Government and local authorities. She is absolutely right.

Listening to the debate, I had a sense of déjà vu in relation to a similar debate that we had several months ago, when the SNP Government took aim at UK Government policy. The broad thrust of its argument was the same as it is today. It was to say that the levelling up agenda undermines devolution, neglects parts of Scotland and does not match existing funding. I do not accept that those claims stand up to scrutiny.

The idea that the shared prosperity fund undermines the devolution settlement is not a credible view. I will address Christine Grahame’s point head on. As I noted in the previous debate on the subject, there is nothing in the devolution settlement—there is not one provision in the Scotland Acts—that prevents the UK Government from funding devolved policy areas. There is an underlying contradiction in the SNP’s position. As Murdo Fraser said, the SNP is quite happy to receive funds from the EU, but it is outraged when funding comes from the UK Government.

Photo of Christine Grahame Christine Grahame Scottish National Party

In my long time in the Parliament—it has perhaps been too long for some people—I have never seen a UK Government behaving in this way towards devolution and devolved areas; not once have I seen that.

Photo of Donald Cameron Donald Cameron Conservative

Christine Grahame has not answered the question. She cannot point to a provision in the devolution settlement that does what she says it does.

The shared prosperity fund puts funding directly in the hands of local authorities and others on the front line, so that they can deliver the projects for which they seek funding. There seems to be an extraordinary unwillingness on the part of the Scottish Government to acknowledge that, which is to do with its centralising tendency.

Photo of Donald Cameron Donald Cameron Conservative

I am sorry—normally, I would, but I do not have time.

There is no reason whatever to prevent the UK Government from passing funding directly to local authorities and the organisations that seek it. As Murdo Fraser said, that has been welcomed at local level by SNP councillors. As Miles Briggs said, COSLA and the UK Government are having positive discussions.

I want to deal with the important point that Rhoda Grant—like her, I represent the Highlands and Islands—made about the fact that certain parts of Scotland have not received the same priority. I welcome the fact that some areas, such as Argyll and Bute and the Western Isles, are considered to be priority areas for community renewal funding, but I note that some parts of the Highlands and Islands are split between priority 2 and priority 3 zones for levelling up funding.

However, many of the local authorities in priority 3 areas have benefited from growth deals. I note, too, that, in the first round of community renewal funding, the seaweed academy in Argyll and Bute has received funding, and the greatest pub in Scotland, the Old Forge in Knoydart, has received community ownership funding. It is important to note that, although priority bands give an indication of priority, they are not fixed and are not insurmountable. The fact that the fund has other criteria for investment allows regions in lower priority bands to receive funds earlier than regions in higher bands, if their bids are considered to be better.

Having said all that, I make it clear that I will not stint in advocating for the region that I represent, and I will continue to put pressure on UK Government colleagues to recognise the fact that remote and rural communities in the Highlands and Islands need investment and assistance, in the light of the many varied challenges that exist.

We believe that the shared prosperity fund will empower local authorities, so let us grasp this opportunity and reap the benefits.

The Presiding Officer:

I call Richard Lochhead to wind up the debate.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I thank all members for their speeches in this important debate. We all want the best for our communities and we all want to tackle inequality and create jobs.

I say to Donald Cameron that I had a constructive meeting with Mr O’Brien last week. I hope that he continues to be constructive and to listen to the arguments that I put to him on behalf of the Scottish Government, and I hope that he will deliver. Time will tell, in the coming weeks and months. We will continue to negotiate and discuss matters constructively with Mr O’Brien and his colleagues in the UK Government.

We have learned a few things in the debate. We learned from the Conservative Party that true devolution involves sidelining and ignoring the Scottish Parliament. The logical conclusion of the Conservatives’ position—which is not surprising, as they have never been enthusiastic about Scottish self-government—is that we should scrap the Scottish Parliament. That is the logical conclusion of all the arguments that Conservative members put forward in the Parliament today. Albeit that I am quite attracted to not having any Scottish Tory MSPs in this country, the rest of us want to respect Scottish democracy and opinion poll after opinion poll, year after year, shows that the people of Scotland have way more trust in the Scottish Parliament than they have in Westminster when it comes to looking after their interests.

Photo of Elizabeth Smith Elizabeth Smith Conservative

Why does Mr Lochhead think that local government has been so enthusiastic about many aspects of the shared prosperity fund?

Photo of Richard Lochhead Richard Lochhead Scottish National Party

COSLA and others want devolution to be respected by the UK Government when it comes to the successor funds that replace the European funds that we have lost because of Brexit or will lose over the next couple of years.

I say to Paul Sweeney that the arguments that we are having today are not tedious; they are about job creation in Scotland’s communities, tackling inequalities and doing what is best for Scotland. They are about the Conservative UK Government delivering on promises that it made to the people of Scotland. Members should remember that we were told that we would not lose out as a result of Brexit and that the money would be matched. Now we face, as the UK Treasury Committee put it, a 40 per cent cut.

I am sure that we all remember, too, being told that Brexit would lead to the strengthening of the Scottish Parliament and devolution. Of course, that is not what is happening here; the Scottish Parliament is being bypassed.

The approach that the UK Government is taking at the moment means that we lose out on the autonomy that we enjoyed under the European Union. I remind all members that we had far more control over allocations, governance and policy aims while we were in the EU than is the case under the current offer from the UK Government. That gets to the heart of the debate.

I think that Michael Gove said, and certainly Mr O’Brien said to me at our meeting last week, that the UK Government relies on the knowledge and expertise of the Scottish Government to ensure that the successor funds work properly and deliver for the people of Scotland. Michelle Thomson hit the nail on the head when she referred to the irony of the UK Government making such comments while, at the same time, wanting to sideline the Scottish Parliament and the Scottish Government. It cannot have it both ways.

Photo of Elizabeth Smith Elizabeth Smith Conservative

Does Mr Lochhead acknowledge that, when it comes to the city deals, for example, there has been first-class engagement between the Westminster Government, the Scottish Government, local authorities and local stakeholders? That, surely, is joined-up thinking that is very much to Scotland’s benefit.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

Liz Smith has just made our point for us. On the city region growth deals, we were treated as an equal partner; with the successor to EU funding we are being carved out and sidelined. Liz Smith’s intervention made the Government’s point.

Since the 1970s, Scotland has received and delivered more than £6 billion of EU structural funding. That investment enabled the Scottish Government and our partners to fund a huge number of projects of national importance. Rhoda Grant spoke well about the importance of structural funding in transforming the Highlands and Islands. It funded the creation of the University of the Highlands and Islands, the construction of roads such as the spinal route through the Western Isles, and the delivery of modern apprenticeships and low-carbon travel and transport programmes across our communities. All of that is put at risk as we lose those EU funds.

The development of the UK shared prosperity fund has involved no consideration of or respect for the wealth of expertise that has built up over decades of successful delivery of such projects by the Scottish Government. The UK Government is proposing that the fund, which was developed in isolation, be used for lockable bike stands, graffiti removal and litter picking, in the name of local pride. The resemblance between the projects and purposes of the shared prosperity fund and those of EU investment is frustratingly faint. We have been badly let down by the UK Government’s lack of vision for the fund.

Nearly 18 months ago, we set out our vision for how a Scottish shared prosperity fund could be used. Members know that we aim to reduce economic inequalities and empower regions by working with them. We wanted to invest in projects that would reduce poverty, provide skills and job opportunities and grow the regional business base. We set those aims in the context of the wellbeing economy that we want to create, tackling climate change at the same time and taking an holistic approach to investment in our country.

Those plans reflected the spirit of previous EU investments. They were about projects that were aligned to national priorities and were of strategic importance to our country. I refer to projects such as the University of Edinburgh’s centre for regenerative medicine, Scottish Canals’ Falkirk wheel or the moving on project from the Scottish Council for Voluntary Organisations. We have all seen the briefing that the SCVO sent to us for the debate, which said that some employability programmes and other programmes that it has been involved in delivering are at risk because of the UK Government’s procrastination and delay over the successor funding.

It is a matter of democratic principle. All members must agree that the Scottish Parliament cannot allow the UK Government to infringe upon our devolved autonomy. The UK Government must also deliver on its pledges to the people of Scotland that we would not lose out because of Brexit and that it would match the EU funding. Those two commitments must be delivered in the near future and the UK Government must treat the Scottish Government as an equal partner.