United Kingdom Shared Prosperity Fund

– in the Scottish Parliament at on 27 April 2022.

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Photo of Liam McArthur Liam McArthur Liberal Democrat

The next item of business is a debate on motion S6M-04159, in the name of Richard Lochhead, on the United Kingdom shared prosperity fund’s implications for Scotland. I encourage all members who want to participate in the debate to press their request-to-speak button or to type R in the chat function.

I call Richard Lochhead to speak to and move the motion. I can give you about 13 minutes, minister.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

In this chamber, we have discussed many times the value to Scotland of European Union membership. That value could be measured in many different ways and was not solely monetary. Nevertheless, EU funding has played an important role in our country’s economic and social development over many decades.

As if Scotland being taken out of the EU against our will were not bad enough, the UK Government has now broken two key promises. It promised that EU funding would be replaced so that Scotland would not lose out financially from Brexit, and it promised that devolution and this Parliament would be respected and strengthened post-Brexit. As the recent announcement illustrates, UK ministers have reneged on both of those key promises to Scotland.

Even before devolution, Scotland controlled its share of EU funding. We delivered about £6 billion of investment to thousands of projects that directly benefited Scottish communities. We were respected as equals by the EU. Now, we have the UK Government’s replacement for four decades of EU funding, the shared prosperity fund. Given the publication of the fund’s prospectus, let me reinforce a point that I have made before: it seems that, for the UK Government, “levelling up” means losing out for all of Scotland.

Photo of Elizabeth Smith Elizabeth Smith Conservative

I am interested to hear the minister say that. Councillor Iain Nicolson, from Renfrewshire Council, which is set to get the largest investment—£38 million—said:

“Delighted to receive official letter tonight confirming Levelling Up Fund award of ... £38 million. This will transform Paisley Harbour, Abercorn Street with improved connections to Glasgow Airport and our Advance Manufacturing site which is ... under construction.”

That is from The National on 28 October 2021.

The Deputy Presiding Officer:

I can give you the time back, minister.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I thank Liz Smith for her intervention, which gives me the opportunity to say that one of the big issues with the fund is that it goes only to local authorities, and many organisations and national projects will lose out as a result.

The UK Government made a promise that the lost EU funding would be replaced with an equal, if not greater, fund. It also told us that it would respect devolution. For members who have doubts about that, let me quote UK Government ministers themselves. In 2020, Simon Clarke said:

“The key point is that we want to make sure that this gives the Scottish Government meaningful control over key aspects of resources.”—[Official Report, House of Commons, 22 January 2020; Vol 670, c 101WH.]

In 2020, Simon Hart said:

“nothing contained in the proposals for the shared prosperity fund will in any way drive a coach and horses through the devolution settlement.”—[Official Report, House of Commons, 15 January 2020; Vol 669, c 1007.]

In 2021, Robert Jenrick said:

The UK shared prosperity fund will ensure that at least as much, if not more, funding goes 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 622.]

However, here we are, in 2022, and we know that all those promises have not been delivered on. All the promises have been broken. The UK Government is offering Scotland £212 million over a three-year period, which is way below our expectations and way below matching EU funding.

The Scottish Government calculates that £183 million per year is required to replace EU funding. Multiplying that over the same three-year SPF period, Scotland should receive at least £549 million, so the UK Government’s figures simply do not add up. That £212 million equates to a 60 per cent reduction in real terms, and we know that, from this smaller pot, the Highlands and Islands are getting an even smaller share. Whereas they previously received 19 per cent of the total awards from the EU, they now stand to receive just 11 per cent of the SPF allocation for Scotland. Let us think about that for a second. The flagship of EU investment in Scotland—the area recognised as having some of the greatest economic barriers to development—will now receive just £24 million over three years. The Highlands and Islands, like the rest of Scotland, are certainly losing out.

It is a struggle to understand the UK Government’s claims that the SPF is a full replacement. No amount of mental gymnastics can lead to that conclusion, but I want to test it. Did the UK Government perhaps decide to mirror the 2014 allocations, with no inflationary uplift? No. If we use the figures from the most recent EU programme, our annual average allocation was £111 million. Therefore, over three years, we should be receiving £333 million. If that is the case, we are £121 million short, or 36 per cent down on what we got in the EU programme. Would the Barnett consequentials have delivered for Scotland? No. We are not even getting a Barnett share of funding, which would be more than £252 million for three years. We are £40 million, or 16 per cent, below that figure.

Any way we cut it, the £212 million that has been allocated to Scotland falls way short, so how is the UK Government justifying its claim that it is offering an equal replacement? It seems that it is adding the unclaimed funding from the current EU structural fund programmes to the shared prosperity fund value to make a new total and saying that it is matching the funds. We have to ask: how can it possibly be the case that the UK Government can include funding that it is claiming to also fully replace? The EU funding is already committed to serving EU priorities, so how can it be part of the shared prosperity fund? It does not make sense—it does not add up.

Maurice Golden is laughing, but I would like to hear him explain how the UK Government can claim to be matching those funds. The UK Government seems to be treating us all like fools. Perhaps the member is treating us like fools as well.

Neither the Scottish ministers nor the office of the chief economist for Scotland agreed to or endorsed the overall quantum or the allocations to each local authority in Scotland. There was no opportunity to do so, because no formal governance was established ahead of the launch of the shared prosperity fund to provide a forum for agreement. How on earth can the fund have been appropriately launched and managed without any governance or role for the Scottish Government?

For close to three years, Scottish ministers have been calling for the devolution settlement to be respected and for the UK Government to preserve the powers that we have been elected to exercise. Those justified requests were all ignored. The review into intergovernmental relations set out proposals for how each of the four nations’ Governments might work together more effectively. Mr Gove responded by stating that he wished to work more cohesively and transparently with us all. Although Scottish ministers expressed a willingness to engage, the First Minister said that the real test would be whether the UK Government was capable of acting with good will and trust. It is clear that it is failing that test as well.

Scottish ministers have been excluded from any decision-making role in the fund, and the recently shared terms of reference for a joint ministerial board make it explicit that UK ministers will always have the final say. The devolved Governments have been invited to join the board as advisers, but our job is not to serve the UK Government. We were not elected to advise Westminster; we were elected to lead, to make decisions and to take responsibility for the future wellbeing of Scotland. I agree with the Welsh Minister for Economy, who stated:

“The proposed role of the Welsh Government also falls short of ... genuine co-decision making ... On this basis, it has not been possible to endorse the approach the UK Government is taking”.

Likewise, the Scottish Government cannot endorse the shared prosperity fund, as it entails losing out on funding and losing our democratic right to devolved authority.

We often hear Opposition MSPs speak about the city region and growth deals in Scotland as a very good example of partnership working between Governments. I do not disagree, but it is vital that I point out the differences between the shared prosperity fund and those deals. The city deals programme was founded on the basis of equal funding and a robust governance structure whereby no approvals or key decisions are made without agreement. That is a different dynamic, with a different agenda, that establishes parity of esteem between Governments and their regional partners. By contrast, the UK Government has deliberately designed the shared prosperity fund so that it is the sole decision maker and funder, with no call to match funds and no role for the Scottish Government. The Scottish Government cannot be an equal partner when it has no say in how the money is being used. No one should be misled by the attempted comparison to the city deals—the shared prosperity fund is not a fund of equals.

That disingenuous behaviour is also seen in the role that has been given to members of Parliament in relation to the fund. The application process is structured so that investment plans must receive endorsement by local MPs. That is a deliberate manipulation of the system to politicise public funding and make claims that MPs endorse the fund, when, in fact, funds are put at risk if MPs do not give their endorsement. Approval cannot be forced and called endorsement without twisting the truth.

It is a cold irony that, at a time when we are witnessing the worst cost of living crisis for generations, with some people facing the horrendous choice between heating their homes and feeding their families, the UK Government is allowing only local authorities to access the shared prosperity fund. By cutting out the third sector and employability organisations that previously received EU funding, the UK Government is removing any certainty about future funding for organisations that can really make a difference to those who are struggling the most. The briefing sent to MSPs by Citizens Advice Scotland makes that point very well.

Part of the purpose of EU funding is to strengthen economic, social and territorial cohesion by reducing regional imbalances, particularly for remote and rural communities. One of the most recognisable EU-supported schemes in Scotland is the LEADER programme, which delivers bottom-up support to communities for rural development. The current programme supports more than 900 projects across rural Scotland, including 400 initiatives for young people and disadvantaged groups. However, the shared prosperity fund does not replace LEADER, nor are there obvious opportunities for beneficiaries to access similar support through the shared prosperity fund.

Indeed, if local authorities cannot make a link between LEADER projects that might approach them for funding and the pre-determined menu of investment options that has been set by the UK Government, it will be challenging for the shared prosperity fund to continue to support those unique projects. There is real concern that, with the relatively small amount of funding that has been allocated to the more remote and rural areas of Scotland, our smaller community groups will lose out. For example, communities in the Western Isles and Clackmannanshire will each have access to just over £2 million in total.

Other opportunities have been lost as a result of our being hauled out of Europe, such as our being hauled out of the European territorial co-operation programmes. If Scotland is unable to continue with those programmes, we will miss out on co-operation with our European neighbours on shared challenges such as climate change, health in rural areas and the preservation of biodiversity.

Not only are we losing out as a result of the shared prosperity fund, but barriers are put being put in the way of achieving our own goals as a result of levelling up and Brexit. Before Brexit, the UK Government at least appeared to recognise our democratic mandate. However, it is clear that we are no longer dealing with a UK Government that respects the Parliament or the devolution settlement. We are witnessing an aggressive move by the UK Government to intervene in devolved areas. That is evident in its union strategy and the United Kingdom Internal Market Act 2020, which restores powers to UK ministers to spend in devolved areas—powers that had been devolved by the Scotland Act 1998. The Opposition might claim that we are witnessing devolution in action, with the money from the shared prosperity fund going directly to councils. However, that cannot be the case when an entire level of devolution is being excluded. What we really have is an example of the UK Government acting as though the Scottish Parliament simply does not exist. That is erasing devolution and ignoring the will of Scotland’s people.

I call on the Parliament to agree that the implications of the shared prosperity fund for Scotland are intolerable. We are losing out financially and we are losing our democratic autonomy. The UK Government must reverse both of those broken promises as soon as possible, so that we can deliver for the people of Scotland, our communities and our economy.

I move,

That the Parliament agrees that the UK Government’s Shared Prosperity Fund fails to meet the Conservative manifesto commitment to replace Scotland’s EU Structural Funds in full; understands that Scotland will receive only £212 million, which is £337 million short of the £549 million estimated to be an appropriate replacement for EU Structural Funds, and calls on the UK Government to immediately increase the value of the fund to at least the level provided previously by Scotland’s EU Structural Funds; believes that the failure to do this will leave communities and third sector organisations across Scotland without important resources needed to tackle poverty and inequality; further believes that the lack of decision making for the Scottish Government in the governance of the Fund undermines devolution; considers that this approach will fail Scotland’s communities, which have benefited substantially from decades of EU investment, and further calls on the UK Government to fully devolve control of the Fund to the Scottish Parliament and the Scottish Government.

The Deputy Presiding Officer:

I remind those who wish to speak in the debate and have not yet pressed their request-to-speak buttons to do so as soon as possible. I advise members that there is a bit of time in hand, so if they take interventions, they will be recompensed for the time.

Photo of Elizabeth Smith Elizabeth Smith Conservative

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

However, I stress once again, as I did in the previous debate on exactly the same issue, that three things matter in the whole debate. Those are, first, the very best interests of Scotland, especially in terms of improving our economic performance; secondly, that our local authorities, which have, for a long time, been asking for more autonomy, should feel empowered; and thirdly, that there is a joined-up approach between Westminster, the Scottish Government and local authorities. I will dwell on each of those for a minute.

In recent weeks, this Parliament has had two debates on the cost of living crisis, and quite rightly so. In both debates, the Scottish National Party set out its very strong criticism of UK Government economic policy. It claimed that the policy direction was all wrong as it ignored the plight of the poorest in society and was failing to address the concerns of Scotland’s communities where there is low economic growth and investment and fewer opportunities in the job market.

What I do not understand, therefore, is why the SNP is continuing to moan about the shared prosperity fund when it is designed to do just that—namely, to address the economic imbalance and income gap.

Photo of John Mason John Mason Scottish National Party

I thank the member very much for giving way. Would she accept that, while we are not criticising getting some money, we are criticising that (a) the fund is too small and that (b) Scotland’s share is too small?

Photo of Elizabeth Smith Elizabeth Smith Conservative

I am afraid that that is not what is coming across from the SNP just now. What is coming across is the allegation that UK Government’s economic policy is all in the wrong direction, but the shared prosperity fund is addressing many of the exact issues that the SNP has been complaining about.

On the second point, we know that there are many inside local government—I just quoted one when I intervened on the cabinet secretary—who have felt heavily constrained not only by the weaknesses in their local government financial settlements, which have, year on year, handed down real-term cuts, but by the lack of autonomy that they have had to endure. Again, the shared prosperity fund is designed to provide greater autonomy to local communities—

Photo of Elizabeth Smith Elizabeth Smith Conservative

I will not take an intervention just now.

After all, communities are best placed to know exactly what has to be done in their local area. Several SNP-run councils also take that view.

Thirdly, I have no doubt whatsoever that, given the very significant challenges facing the country, voters would far rather see Scotland’s two Governments working together than working against each other. They want them to get on with the job, free from the constant negativity and divisiveness that is corroding our political life.

Most voters accept that the United Kingdom Internal Market Act 2020 confers a right on Westminster to provide money in areas of the UK for which it does not have devolved competence—for example, for infrastructure projects such as roads or railways. Far from being an all-out attack on devolution, as the cabinet secretary seemed to imply, that is about spending more money in Scotland.

Scotland desperately needs the investment. That view is shared by local government and by many local community stakeholders; indeed, Kate Forbes said it just six weeks ago. Those stakeholders tell us that that gives them better ownership of what they want to achieve in their local areas and that the bidding process that has been put in place will enhance local scrutiny and hopefully deliver better economic and social outcomes.

In other words, instead of the fund being a so-called power grab by Westminster over Holyrood, it is an extension of devolution in a direction that brings more power to local communities, which are best placed to know what has to be done.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

Does Liz Smith not think that voters in Scotland would like to see the UK Government sticking to its promises rather than breaking them?

Photo of Elizabeth Smith Elizabeth Smith Conservative

Stakeholder groups such as the Convention of Scottish Local Authorities and the Scottish Council for Voluntary Organisations have, on several occasions in public, referenced their meetings with the UK Government—as the minister did during the debate on 22 March—and said that there has been seriously good engagement and that, far from breaking promises, they are working well together to ensure much greater economic growth.

The second reason relates to the current economic forecasts for Scotland, which, by whatever measures are used, are extremely gloomy, particularly in terms of weaker economic growth, weaker productivity and weaker trends in the job market. We know that all that has led to weaker income tax revenues, which in turn demonstrates some of the frailties in the Scottish economy. That issue is very much a focus of the Finance and Public Administration Committee’s current deliberations. It also demonstrates that, as has been the case throughout the pandemic, Scotland benefits hugely from being an integral part of the UK. No doubt, that is why there are so few dissenting voices.

Photo of Elizabeth Smith Elizabeth Smith Conservative

I hear, “Here we go”, but why is it that so many people across local authorities have warmly welcomed that? I will deal with—

Photo of Christine Grahame Christine Grahame Scottish National Party

If the Conservative Party is so popular, why have only six Conservative MPs been representing Scotland since the most recent general election?

Photo of Elizabeth Smith Elizabeth Smith Conservative

Let us see what is popular when it comes to the information that the UK Government is providing with regard to those extra funds. I do not think that those extra funds are in the least bit unpopular; in fact, the situation is quite the reverse—they are extremely popular.

I will deal with three of the SNP’s criticisms. It says that there is not the full £183 million of funding to meet EU levels. When calculating the sums, the UK Government took on board the Organisation for Economic Co-operation and Development’s annual exchange rate statistics. The SNP has used other statistics that do not reflect that data, and it has included in its statistics the LEADER funding, even though that is being replaced by other funds rather than by the shared prosperity fund. If the minister wants me to, I am happy to provide all the arithmetic that has been undertaken by the UK Government so that it can be measured against the information that has been used by his Government.

To more fully address the concern that the new funding might initially look as though it falls short—which was acknowledged by the Treasury Committee and by Michael Gove when he appeared at the Finance and Public Administration Committee—it is because some EU money will still be in the system until 2024-25.

Photo of Elizabeth Smith Elizabeth Smith Conservative

I will just finish my point. Michael Gove has given a firm commitment that, as that EU money diminishes, which it will, the shared prosperity fund will be ramped up, and he is prepared to be held to account on that. He added—[Interruption.] He added, quite rightly, that the shared prosperity fund is by no means the only way in which the UK Government is providing additional funding that goes way above the block grant. He cited examples, which the minister also cited in relation to city deals and free ports. Does the minister still wish to intervene?

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I tried to address the disingenuous and misleading point that Michael Gove made, which the member has just repeated, that, once we add the shared prosperity fund to unspent EU funding, we can say that there is match funding. However, if we were in the EU at the moment, we would be spending not only the previous programme’s money but the new programme’s money. Therefore, there is a substantial net loss to Scotland, and it is disingenuous to add unspent money from the previous programme and say that it is match funding.

Photo of Elizabeth Smith Elizabeth Smith Conservative

I really do not understand why the SNP Government has been using the LEADER funding in statistics, given that that money is being replaced by other funds. I do not understand the arithmetic of doing so, and I offer again to provide the minister with the UK Government’s arithmetic.

My time is almost up, but I will finish on this point. I would have thought that levelling up and the shared prosperity fund are very good news for Scotland. It would be nice if, just for once, the Scottish Government could acknowledge—without resorting to the usual grudge and grievance, which are constant hallmarks of the SNP-Green coalition—that that money is extremely welcome and that we desperately need it to address our economic concerns.

I move amendment S6M-04159.1, to leave out from “agrees” to end and insert:

“warmly welcomes the UK Government’s Levelling Up agenda, including the Shared Prosperity Fund, which will replace previous EU Structural Funds and which will provide £212 million of funding to Scotland by 2024-25, and further welcomes the UK Government’s focus on boosting productivity, skills, innovation, jobs and sustainable economic growth across Scotland, and on increasing the transparency of funding and the accountability for decision-making across Scotland’s local communities.”

The Deputy Presiding Officer:

I call Paul Sweeney to speak to and move amendment S6M-04159.2. You have around seven minutes.

Photo of Paul Sweeney Paul Sweeney Labour

It was around two months ago when we discussed the UK shared prosperity fund in the chamber, and I am delighted that the Government has chosen to give more time to consider the implications of the fund for Scotland’s economy.

A substantial number of questions remain unanswered on record as to what would replace the structural funds, including whether the replacement would be as comprehensive as the previous EU funds and the extent to which Scotland would benefit from the new shared prosperity fund.

Over the past five years, we have been assured on numerous occasions that the UK fund would at least match the level of EU funds that it is replacing. Indeed, I remember that the Conservative amendment in the debate in March stated just that. I note that that has been dropped from today’s Conservative amendment, and I wonder whether that is a tacit admission of what we all now know to be a matter of fact: the UK shared prosperity fund is worth less to Scotland’s economy than the European structural and investment funds that it purports to replace.

It does not surprise me that the Conservatives are unwilling to admit that its replacement fund is miserly in comparison with EU funds. I am not the only person asserting that. As we have heard already, the Scottish Government believes it to be significantly less than EU structural funds. The Welsh Government agrees, as do the Northern Ireland Executive and the Northern Powerhouse Partnership. In fact, the Westminster Treasury Committee, which is chaired by a Conservative member—a former Treasury minister—stated that the shared prosperity fund is 40 per cent less than the EU funds that it is replacing and questioned why one of the centrepieces of the UK Government’s levelling up ambitions was to be reduced to such an extent.

We completely agree with the Scottish Government motion when it states that the UK Government should

“immediately increase the value of the fund to at least the level provided” by the EU structural and investment funds.

We are in the middle of a cost of living crisis, a climate crisis and a productivity crisis. We have had more than a decade of austerity, and communities across the country are truly struggling as Britain undergoes the sharpest fall in living standards in my lifetime. People are struggling to put food on the table and to find money to feed their electricity meters. Families are generally struggling to make ends meet. I despair at the hardship that millions of families are facing across the country. We see gross inequalities in our communities every day in our inboxes and in our constituency surgeries.

One in four children is living in poverty, and almost a quarter of all households are living in fuel poverty, which is a figure that is rising exponentially by the day.

Photo of Elizabeth Smith Elizabeth Smith Conservative

The member makes strong points around the considerable concerns about poverty. Nonetheless, does he at least accept that one of the ambitions of the shared prosperity fund is to target areas where there are specific issues so that a levelling-up process is under way in those areas?

The Deputy Presiding Officer:

I can give you that time back.

Photo of Paul Sweeney Paul Sweeney Labour

I absolutely accept that that is the intent of the fund, but I dispute the efficacy in meeting its intention. When we see those metrics, they do not give us great hope for optimism.

This is the first time since the Victorian age that life expectancy has fallen in this country. Food bank use is rising, too. The worst part is that each of those economic ailments is a symptom of political choices. A political choice has been made to reduce the value of the shared prosperity fund to 40 per cent less than the EU structural funds, and that will compound the misery that families face in Scotland.

I turn my attention to the Labour amendment, which references the funding cuts that Scotland’s local authorities have experienced. We know that those have been disproportionate and that the Scottish Government has hammered local authority budgets during the past decade.

Every year, councils across Scotland are forced to make cuts as their budgets are slashed disproportionately. It is the Scottish Government’s centralising instinct and approach to economic sustainability, and its tacit acceptance of Tory laissez-faire economics, that sees Scotland’s productivity lag drastically behind the Organisation for Economic Co-operation and Development. This year is no different, with £250 million of cuts imposed, which is on top of a cumulative total of £6 billion during the past decade.

Photo of John Mason John Mason Scottish National Party

Does the member have a suggestion as to where the £250 million that he would like to give to local authorities would come from?

Photo of Paul Sweeney Paul Sweeney Labour

I know that Mr Mason asserts that this Government operates within a fixed budget envelope, but it has extensive revenue-generating powers that it has not innovated in the slightest because it is intellectually incurious about that. Therefore, the Government’s revenues are constrained by a lack of innovation on the revenue-generating side. I would suggest investigating options; annual ground rents would be one particular opportunity, and the former MSP Andy Wightman offers some interesting views on that. I would direct Mr Mason toward revenue rather than simply managing decline on an ever more constrained budgetary envelope.

We know that the cuts have been disproportionate. It is independently verified that, although the Scottish Government’s budget goes up in real terms, local authorities continue to feel real-terms constraints, and that is having a disproportionately difficult effect on our communities. Although we know that that is happening, we still have concerns about the UK Government’s approach to providing funding directly to local authorities and bypassing the Scottish Government entirely. There are concerns at all levels.

The Tories might not like it, but we have had a devolution settlement since 1999 for a reason. As we have found out in recent months and years, they are quite happy to disregard the devolution settlement whenever it suits them. Breaking the Sewel convention and legislating despite repeated refusals by this Parliament to agree to legislative consent motions is the most obvious and egregious example of their disdain for devolution.

We agree that the funds should be administered as close to communities as possible—the principle of subsidiarity. Ideally, we would like local authorities to be involved heavily in decisions about allocation of the funding, but we are clear that, if that is to happen, it cannot be used to mask further cuts to local authority budgets in the long run.

I will close on the issue of co-operation, as it is of fundamental importance. Who administers the fund might be important to us, but all that the majority of people of Scotland are concerned with is whether their communities are being adequately served and whether public investments are efficiently targeted.

There are undoubtedly differences of opinion between the Scottish and British Governments, but we need them to work collaboratively on this matter. A situation in which the two Governments argue incessantly about the process of administration rather than focus on the delivery of funds will be utterly intolerable and tedious. Let us be clear: communities across Scotland will also suffer as a result. Therefore, we need clarity on the delivery mechanisms for the funds.

As Citizens Advice Scotland points out, because of the current local and regional geography for implementing the funds, voluntary organisations with a national footprint will struggle to access funding and deliver the economies of scale and scope and social impact that are needed for transformative change in poverty and equality outcomes.

Ultimately, we all want the same thing, as the Conservative front bench spokesperson said: to improve the lives of people across Scotland and to use the funds to alleviate the hardship that millions of families face this year and for years to come, by improving living standards. It could not be more important that we get this right. Although Labour’s criticism of the Scottish and UK Governments is well documented, and both are guilty of power grabs at their respective levels, we will work constructively to ensure that the funds are impactful and achieve the outcomes that we all want to see.

I move amendment S6M-04159.2, in the name of Daniel Johnson, to leave out from “further believes” to end and insert

“recognises the importance of joint working between the Scottish and UK governments in order to achieve the common goal of strengthening Scotland’s communities; notes the benefits of previous EU funding, but also the concerns with the transparency in how it was administered and awarded in Scotland; further notes that cuts to the structural funding equivalent by the UK Government coincide with cuts to local government budgets by the SNP administration in cooperation with the Scottish Green Party to the detriment of communities across Scotland, and calls for the replacement for EU funding to fully match what has been available in the past and be administered as close to communities as possible.”

The Deputy Presiding Officer:

We move to the open debate.

Photo of Michelle Thomson Michelle Thomson Scottish National Party

The disrespect that the UK Government regularly displays in its dealings with the Scottish Parliament and Government, and by extension its arrogant dismissal of the democratic voice of the Scottish people, must be resisted.

At the same time as the Tories fall into line to defend a law-breaking Prime Minister, they want to give away more powers to Boris Johnson’s Government. Having disregarded the interests of the Scottish people as they pushed through a destructive Brexit, with its significant loss of trade and freedom of movement, the supine Scots Tories are rolling over yet again in this latest move to undermine our constitutional rights.

Despite there being worked-through plans by the Scottish Government for a Scottish shared prosperity fund that involved local authorities and communities, the UK Government has sought to foist decision making and policy on Scotland with the likes of the Subsidy Control Bill and the United Kingdom Internal Market Act 2020, of which the shared prosperity fund is just one small part.

I agree that the issue is not just about the loss of £337 million to multiple areas across Scotland; it is fundamentally about power. Who could not be alarmed by the UK Government, with its paltry six Tory MPs in Scotland—as Christine Grahame pointed out—and with the Tories not having won here since 1959, giving itself explicit powers to directly spend money across Scotland, without a legislative consent motion being agreed to for the 2020 act?

What are other voices saying? The Fraser of Allander Institute, working with the Institute for Fiscal Studies and the University of Stirling, said:

“The Internal Market Act can therefore be seen as enabling a range of UK government interventions that bypass not only the Barnett formula but the devolved administrations themselves. Perhaps most significantly, these interventions will include the UK Shared Prosperity Fund”.

When Michael Gove appeared before the Finance and Public Administration Committee in February, I asked him whether he was happy to have created a methodology, without consultation with the Scottish Government, that placed Orkney and Shetland in the lowest category of transport connectivity need, alongside the City of London. His bizarre response, noted in the Official Report, was:

“The conclusion about whether funding has been distributed equitably will come at the end of the process. It is a bit like deciding who the hero or heroine of a play is going to be on the basis of which character appears first and before you know how the play is going to turn out.”

I can well understand Mr Gove viewing his work as being akin to a piece of fiction, but the trouble is that it is actually a farce. It is certainly not grounded in any real understanding of the needs of our communities. He has created a methodology that does not distinguish between the needs of Shetland and those of the City of London. Arguably, that is not unlike Boris Johnson being unable to distinguish between the truth and lies.

When the committee convener raised issues about the involvement of MSPs, frankly, Mr Gove misled the committee. To again quote from the Official Report, he said:

“It is an important requirement that they are consulted”.—[Official Report, Finance and Public Administration Committee, 24 February 2022; c 24, 7.]

However, a review of the publication “UK Shared Prosperity Fund: prospectus”, which was published on 13 April, gives a prominent and well-articulated role for MPs but only a flimsy passing mention of MSPs.

Criticism is levied not only by the SNP but by Vaughan Gething, the Minister for Economy in Wales, who describes the prospectus thus:

“While this overall funding package compares relatively favourably to other UK nations, it does not meet the UK Government’s commitment to at least match the size of the EU structural funds Wales has previously and would have qualified for.”

Basically, that means that Wales does badly out of this deal, but not as badly as Scotland.

I therefore ask the minister whether he will consider providing additional guidance to local authorities to ensure that any projects that come forward are compatible with Scotland’s economic strategy, and to require consultation with MSPs alongside consultation with MPs. That is surely the least that we can do. I for one will be insisting on being included in consideration of projects that affect my constituents.

At every step of the way, there has been a failure to respect the distinctive needs of Scotland and a deliberate undermining of the role of the Scottish Parliament. To add insult to injury, a fund has been set up through which a minister in charge of English housing has devised an incompetent methodology for the allocation of funds. Scotland can do so much better than that, but it appears that that will be only as an independent country.

Photo of Maurice Golden Maurice Golden Conservative

Members would be forgiven for thinking that hundreds of millions of pounds that are coming directly to Scotland’s communities to address poverty and inequality and to create jobs and opportunities would be welcomed. However, as always, the SNP would rather take the opportunity to promote its agenda of grievance and gripe.

We need only explore its motion to see how baseless its opposition is to the shared prosperity fund. The motion says that the fund will leave Scotland “short”, as a replacement for EU structural funds, but that fails to recognise that Scotland is still receiving legacy EU funding. As that tapers off, UK funding will increase to replace it and, by 2025, the shared prosperity fund will fully match Scotland’s EU structural funds in real terms.

The motion says that

“third sector organisations across Scotland” will be left

“without important resources needed to tackle poverty and inequality”.

Anyone who has ever been involved in EU funding, particularly those in Scotland’s third sector, would shiver at the sheer mention of EU funding, because there were so many issues with it, including late payment of funds. Payment was often so delayed that the resulting cash-flow issues would put organisations under severe financial pressures. On occasion, in order for them to survive, cash-flow bail-outs would be required from public sector partners.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

George Osborne, the former Conservative Chancellor of the Exchequer, has said that what is happening just now is unfair. Is that SNP grudge and grievance?

Photo of Maurice Golden Maurice Golden Conservative

I do not know the context of that comment, but arguing against funding going to Scotland’s most deprived communities is exactly what the SNP is doing.

EU bureaucracy was so rigid that it made the claim process overly burdensome. Feedback from across the third sector includes evidence of delayed claims, which were sometimes worth hundreds of thousands of pounds, because of the smallest clerical errors. The threat of an EU audit would hang over third sector organisations, which knew that, if they were selected for an audit, the resources involved in complying with it would be very draining. Due to excessive restrictions on what could be claimed, and the significant management and administrative costs involved in running EU-funded projects, organisations would often be worse off as a result of delivering EU projects.

The motion says that

“communities and third sector organisations across Scotland” will be left

“without important resources”,

but EU structural funds could be such a poisoned chalice that—once bitten, twice shy—many organisations would refuse to bid for EU funding due to their previous experiences. The result was that communities and third sector organisations missed out on vital EU funds for years because of refusal by many to entertain the idea of making an application.

The UK Government is determined to learn from that experience and has committed to the shared prosperity fund adhering to the following tenets: bureaucracy will be slashed, there will be far more discretion over what money is spent on and requirements for match funding will be scrapped.

The motion claims that

“the governance of the Fund undermines devolution”,

but by providing funding directly to local authorities, the fund embodies devolution at its purest level. It ensures that councils, which are democratically accountable to local people, decide on funding for local priorities.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

The House of Lords, the Scottish Affairs Committee and the Institute for Government all state that the UK Government should engage with the Scottish Government on delivery and design of the fund. Are they wrong? They recognise that the fund undermines devolution.

Photo of Maurice Golden Maurice Golden Conservative

Let us be clear. It would be far better if the SNP got behind the fund and supported and encouraged bids, because it seems that, when money is made available for SNP councils to help the most deprived communities in their areas, they do not want it.

Let us take the example of Dundee. The UK Government’s levelling up fund identified the city as a top priority for funding, but the SNP council could not get its act together and the bid was never submitted, even when other Scottish local authorities managed to submit bids. That was a terrible dereliction of duty by the SNP council, which failed people, businesses and the communities that live and work there.

As it has with everything else, the SNP has a woeful track record of spending public funds, having blown billions of pounds on a catalogue of calamities, including the CalMac ferries fiasco, late-opening hospitals, staggering overspends on information technology projects, compensation for malicious prosecutions, mismanaged Government bail-outs and the scrapped named person scheme.

It should come as solace to Scotland’s people and its communities that the shared prosperity fund is bypassing the SNP Government and its unmitigated ability to make a shambles of public spending decisions, and will instead go straight to Scotland’s local councils, which will enable them to directly address priorities and needs in their local communities.

I urge Parliament to support the amendment in the name of Liz Smith, which warmly welcomes the UK Government’s levelling up agenda—including the shared prosperity fund—to boost productivity, skills, innovation, jobs and sustainable economic growth across Scotland to make it truly stronger.

The Deputy Presiding Officer:

I call John Mason to speak for around six minutes.

Photo of John Mason John Mason Scottish National Party

Thank you very much, Presiding Officer, for the opportunity to speak.

Our subject today is the UK’s shared prosperity fund, but I suggest that we really need to think more widely about the kind of country in which we want to live. We are just coming out of the pandemic, so now seems like a good time to have a vision for where we are going.

Do we want to live a country where there is vast and growing wealth in London and the south-east of England, which will inevitably suck in some of the best talent from Scotland—not to mention from Wales, Northern Ireland, and the north and midlands of England—and, therefore, in a country where we would live permanently with many people in Scotland and England struggling all their lives with poverty and making ends meet? Alternatively, do we want to live in a country—the UK or Scotland—where, although differences would, of course, exist between the people who are better-off and those who are less well-off, no one has far too much and no one has far too little?

We are debating the shared prosperity fund, so first let us think about those words. For “prosperity”, some of the synonyms that I have seen include “abundance”, “fortune”, “luxury”, “plenty”, and “riches”. Clearly, some people in the UK and Scotland are in that position—we think particularly of Rishi Sunak and his wife, of Russian oligarchs, of some football players and so on.

The other word is “shared”. Sharing, as I understand it, means that someone who has a lot gives away some of it to someone who has less, so one person ends up with less, and one with more. We learn as children to share toys, treats and so on. Perhaps we are in danger, as individuals and as a society, of forgetting that sharing—even sacrificing—what we have is a good thing that benefits us all.

However, is that what is actually happening now in the UK? Is there really a redistribution of prosperity, or are the richest individuals and regions largely just keeping their riches? Is the so-called shared prosperity fund more about passing on a few scraps that the rich do not need?

Photo of Elizabeth Smith Elizabeth Smith Conservative

I thank Mr Mason for giving way. He sits on the same committee that I sit on, and he is well aware of the very significant issues around the inequalities to which he has just alluded. To tackle those inequalities, we surely have to inspire greater productivity, economic growth and investment. Those are the principles that underpin the shared prosperity fund. Does he accept that?

Photo of John Mason John Mason Scottish National Party

I only partly accept that: I accept that we want to grow the economy of Scotland and the UK sustainably.

Let us look at some of the figures. We need to consider how the current prosperity and wealth—the UK is one of the wealthiest countries in the world—are shared, and whether the shared prosperity fund is helping that sharing. I have worked out that if the fund is to be £2.6 billion over three years, that is about £13 per head of the population per year. To look at it another way, if we say that half the population will gain and half will lose, then it is a transfer of £26 from the richest people to the poorest. When we consider that even moderately well-off people can spend hundreds of pounds on a foreign holiday or £26 on one meal, the fund does not look like a serious sharing of prosperity.

It is worth thinking about some of the wealth that is sitting around in the UK. It is said that we want to attract Russian and other wealthy people to the UK so that their wealth will be spread around and benefit all of us. However, is their wealth really shared around?

Photo of John Mason John Mason Scottish National Party

No. I am sorry.

Do we all benefit? Roman Abramovich is reputed to have assets that are worth £12.1 billion. I accept that not all those assets would be here in the UK, but that sum in itself is more than four times the total shared prosperity fund for three years.

Why does the UK encourage and support tax havens in the Isle of Man, the Channel Islands, the Cayman Islands and elsewhere? Who benefits from that? Is it the ordinary people of Glasgow? Is the prosperity that is linked to those places being shared?

Photo of John Mason John Mason Scottish National Party

No. I am sorry, but I have given way already.

I will return specifically to the UK shared prosperity fund. I was grateful for a number of the briefings that came from the third sector, despite what Maurice Golden said. Action for Children, Barnardo’s Scotland and the Prince’s Trust all make the point that it looks as though there will be no reduction in bureaucracy and red tape from when we had European funding. There will also be gaps between the EU funding that ends in December this year and the UK SPF becoming mature and established.

Citizens Advice Scotland considers that the voluntary sector is being largely ignored and will find it difficult to access funds. It also considers that there is too much emphasis on physical assets.

Once again, the Labour amendment wants more money from the Scottish budget for local government, but it fails to say where that money would come from, although I accept that, in response to my intervention, the suggestion was made that there should be more taxes. I presume that, otherwise, the NHS budget would have to suffer.

The Conservative amendment celebrates £212 million, which is roughly £40 per head in Scotland over three years, or again £13 per head each year. I welcome the £13 per head, but it is hardly going to level anything up, nor could it be described as sharing prosperity.

The cross-party group on industrial communities that is headed up by my colleague Colin Beattie, works closely with the Industrial Communities Alliance, which has produced some helpful reports in recent years. It looks largely at older industrial Britain as a whole, including the midlands and the north of England as well as Scotland and Wales. A report entitled “Beyond the Pandemic” that the ICA commissioned from Sheffield Hallam University, and which came out last December, points out that

“Older industrial Britain was in need of Levelling Up before the pandemic and that remains the case today.”

Although we are obviously specifically concerned about Scotland, we can argue, along with other parts of the UK, that a much more serious approach to shared prosperity or levelling up should be being taken.

Another ICA report on state aid from 2019 compares regional aid in the UK with Germany, which spends more than three times as much, and France, which spends more than eight times as much, despite the UK having some of the widest regional and local differences in prosperity in Europe.

The first bullet point in the ICA’s 2021 report says that the shared prosperity fund should be

“a genuine replacement for EU funding” and that it should be allocated according to need and

“strong targeting on less prosperous local economies.”

I fully endorse that.

Today we are debating a shared prosperity fund that largely ignores the huge amount of wealth and prosperity that is washing around the UK, and which does very little in the way of sharing much of it. Is that really the kind of country that we want to live in? I do not.

Photo of Richard Leonard Richard Leonard Labour

We are told in the ministerial foreword to the prospectus for the shared prosperity fund, which was announced exactly two weeks ago, that it is about

“levelling up opportunity and prosperity and overcoming deep-seated geographical inequalities that have held us back for too long.”

Those are fine words; a worthy statement of intent—beguiling, even, were they not coming from the party that slashed regional assistance down the years, emasculated assisted areas and abandoned entire communities. This is the party that told the people that the market would adjust, that it would deliver, that there would be trickle-down from the overheated south to the depressed regions and nations of the north. It was a myth—a deception, but one that was dogmatically clung on to while regional divides got wider and regional disparities got deeper.

This is the same party that, through its doctrinaire approach to fiscal policy and its programme of privatisation in place of public provision, which Boris Johnson announced just yesterday he wants to let rip again, not only exacerbates the cost of living crisis, but fuels those regional inequalities that have held us back for too long.

Photo of Michelle Thomson Michelle Thomson Scottish National Party

I am sorry to interrupt the member. He is giving a fine speech, all of which I agree with thus far. However, he is the first member in the debate who has clearly recognised that macroeconomic policy fundamentally resides with Westminster. That is something that the Scottish Tories either do not know or do not understand. Would he agree with that?

Photo of Richard Leonard Richard Leonard Labour

Yes, I accept that, under the terms of the devolution settlement, important macroeconomic decisions on monetary policy, fiscal policy and currency policy are retained at UK level.

However, I want to go on to talk about another element of regional policy that I think is central to this debate, because it impinges on the real lived experience of people. The Conservative Party is a party that has reversed civil service dispersal, from closing the National Savings and Investments Bank at Cowglen, where 6,000 people once worked, to axing the Department for Work and Pensions processing centre at Coatbridge, at a cost of 250 jobs, in 2017. Just this month, in the past few days, it has closed the tax centre at Cumbernauld, so that, in one fell swoop, 1,300 jobs have been lost to the town.

It was remarkable that, in his evidence to a committee of this Parliament just eight weeks ago, Michael Gove could not help but attack regional policy, economic planning and the developmental state. He lectured us:

“We cannot direct investment in the way that we did in the past. The shadows of Ravenscraig and Linwood show that”.—[Official Report, Finance and Public Administration Committee, 24 February 2022; c 14.]

I say to the Secretary of State for Levelling Up, Housing and Communities that if he thinks that Ravenscraig, which was the largest hot strip steel mill in western Europe, was a failure, he should go and speak to the people of Lanarkshire and the generations who were employed there for decades, who saw the sun rise, as well as set, on those cooling towers, for whom there would have been a long-term future if investment had been applied to modern steel technologies, instead of capital being starved, before being jettisoned, with all the hopes of the people along with it.

Turning to the Scottish National Party, I am bound to say to it that this is not a game. In a Scottish Government press release that was issued on 13 April, the Minister for Business, Trade, Tourism and Enterprise was quoted as saying:

“communities across the country will miss out on around £150 million of investment in 2022-23.”

That is wrong. Under the terms of the withdrawal agreement, the EU funds will continue, so that is wrong, and the minister knows that it is wrong. It does not help the quality of debate or the integrity of our democracy to continue to propagate that statement this afternoon.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I explain to the member that the minister is not wrong—he is perfectly correct, because it is possible to spend existing EU funds from the previous programme up to 2021 and funds from the new European programme from 2021 onwards at the same time. Therefore, we are losing out; the funding is not being matched by the UK Government. The minister was perfectly correct in what he said.

The Deputy Presiding Officer:

I can give you the time back for the interventions, Mr Leonard.

Photo of Richard Leonard Richard Leonard Labour

Thank you very much.

I turn to what people are witnessing out there in communities across the country: cumulative cuts to local authority budgets by the SNP. Our communities are missing out on that money. In the region that I represent alone, in the past nine years, £135 million has been stolen from Falkirk Council, £371 million has been axed from South Lanarkshire Council and £455 million has been robbed from the people of North Lanarkshire. That has hit our schools, closed community centres, squeezed elderly care and sacrificed good-quality local jobs. As we come out of the pandemic, at the very time when we need new investment in jobs and services, those cuts are getting deeper and even deeper, so I think that the claim that the SNP Government makes this afternoon has an air of a hollow ring to it. It is picking the wrong fight.

As the Institute for Fiscal Studies has said of the shared prosperity fund,

“the UK government has ‘taken back control’ only to stick to an arbitrary, poorly designed, out-of-date funding allocation mechanism.”

Instead of being a spending programme of seven years, the new funding programme is only three years long, which deters the kind of long-term planning and investment that we need.

What we now need is transparency on how the shared prosperity fund will be administered and awarded in Scotland. We need new investment in Scottish local government and a fair funding formula, so that the shared prosperity funding is additional. We need a comprehensive, planned approach to regional policy that is sustainable and long term.

In the end, our purpose must be to build an economy and a society that work not just for people at the top but for all, where a secure and warm home should be a human right, where everyone is entitled to good health and dignity in old age, where lifelong learning and the right to food are established as statutory rights, where decent jobs and useful work are available to all, and where every job is a green job in a full-employment economy. That is what our goals should be, that is where our ambition should lie and that is what the Scottish Labour Party is fighting for.

Photo of Christine Grahame Christine Grahame Scottish National Party

I despair, listening to Richard Leonard, at Labour being prepared to prop up a Tory Government and a failed union yet again. No wonder Labour’s vote in Scotland is shrinking into the distance.

This a significant debate. It is not just about short-changing Scotland to the tune of £337 million of former European structural funds, and breaking a promise to ensure that post-Brexit Scotland would receive, as a minimum, the £549 million that it would have received. That is bad enough, but the UK Government has blatantly and deliberately set about undermining the principles of devolution.

That is also at odds with the UK Government’s own 2018 commitment to

“respect the devolution settlements in Scotland, Wales and Northern Ireland and … engage the devolved administrations to ensure the fund works for places across the UK.”

Alister Jack, the Tories’ spokesman in Scotland, said:

“We intend to work with the Scottish Government and the Convention of Scottish Local Authorities to facilitate collaborative work”.

“Collaborative” is a weasel word, because the UK Government has utterly bypassed the Scottish Government and has dealt directly with individual regions and councils. Does that matter? Of course it does. First, this is no UK gift or act of generosity; it is our money, garnered through our taxes, national insurance, VAT and so on. Secondly, it is a naked use of those funds by the Tories not only to undermine devolution but to stem the rising case for independence.

Consider this: Scotland voted to remain in the EU by a thumping 62 per cent. Boris’s “oven-ready” deal turned out to be a pig’s breakfast, and that £350 million a week for the national health service on the side of a bus was just that—something scribbled on the side of a bus.

When it comes to the NHS and the care sector, we have staff shortages directly as a consequence of Brexit—and we can add lorry drivers, bus drivers, additional red tape and lorries stacked up at ferry ports. It is yet another Boris boorach—he is an ace at those. All of that impacts on the economy. As for reclaiming our fishing waters, we might ask the Scottish fishing industry and processors about that as their produce languishes in those stationary lorry parks.

The actuality of Brexit is not done. I reference Northern Ireland, which also voted remain, by 56 per cent. It now has transborder issues with Éire and with the rest of the UK. There is also that border down the Irish Sea, which was not to be a border and, in Boris-speak, never was a border. After all, if he does not know what a party is, he will not know what a border is. Now he is trailing a piece of legislation to overturn the Brexit deal. By the way, whatever happened to Alister Jack’s tunnel under the Irish Sea—or was it a bridge? It has been abandoned, just like the commitment to respect and work with the devolved Governments.

Did the Scottish Government have plans in place to administer and allocate those former EU funds? Of course it did, but it was right to indicate well in advance:

“We do not know which funds will be replaced. We have no idea what conditions may be placed on the funding. We do not know how long the fund will be for or when it might start.”

Well, we ken noo.

We can add to that the UK’s levelling up fund, which has been referenced by others and which, in my patch, has placed Scottish Borders in priority group 1, with access to £20 million to assist areas with high deprivation.

Of course there is deprivation in the Borders, but what principle is in operation here? In Clackmannanshire, the rate of deprivation is 40 per cent, yet is not on the hit list. Why not? Perhaps because Borders has a Tory council and, in John Lamont, a Tory MP. It is all about helping your buddies and shoring up your vote; it is not about prioritising areas of high deprivation, so let us not kid on about that.

In a BBC interview, my friend Alister Jack gave the game away yet again, when he spoke about the formation of a new cabinet union strategy committee, headed by the Prime Minister, specifically to counter independence. He had the nerve to say:

“This is actually true devolution in practice. Scotland has two governments, and this is the United Kingdom Government spending money, new money, directly with local authorities.”

Here we go. Scotland directly opposed Brexit, yet the Tories ripped Scotland out of the EU, undemocratically. Scotland was told that if it voted yes in 2014 it would be ripped out of the European Union, but the unionists did it for us. Here the Tories have 31 MSPs to the SNP’s 64, and they have only six MPs from Scotland at Westminster, compared with our 45. Wherever we look on the Scottish political landscape, we see that it is undemocratic.

It is worth repeating that the people have spoken time and again. They have rejected the Conservatives and, indeed, Alister Jack, who acts like a colonial governor who is long past his sell-by date.

Failing at the ballot box, the Tories rely on English MPs to impose policies on Scotland and funnel funding for political purposes with no democratic mandate. In 2014, they argued against independence. Well, here we are. Thanks to the union, we are out of Europe. If the Tories think that Scottish people want to continue with this kind of Tory rule and all that it entails, why do they not agree with us and put that to the test with a referendum?

Photo of Maggie Chapman Maggie Chapman Green

Eight weeks ago, when we last debated the UK shared prosperity fund in this chamber, I highlighted three issues that the UK Government’s approach to it tells us about its priorities: it does not care about meeting its own manifesto commitment to match, as a minimum, the funding that our communities, organisations and services would lose as a result of Brexit; it does not care about existing devolved decision-making processes or enhancing community participation and engagement in decision making; and it does not care that the funding, if allocated differently with a coherent strategic approach, could have played a significant role in developing the infrastructure and supporting the organisations and services that our communities will need in the future, as we try to reorient our economy towards wellbeing and the just transition. Leaving aside the broken promises for now—although it comes as no surprise that the UK Government breaks its promises to Scotland—let us unpick what that means for communities and organisations across Scotland.

The UK Government says that it is operating the equivalent of a no-detriment policy for the amount of funding that Scotland is to receive compared with what it would have received if we were still in the European Union. However, as we have already heard, the £212 million over three years represents a 60 per cent cut to the money that Scotland would have received. It is disingenuous in the extreme to suggest that continuing but declining EU money can be counted into the fund to make up the difference. That is not replacement.

Even if we take that statement of equal replacement at face value, it is clear that, regionally, there is definite detriment: some parts of Scotland will be worse off as a result of the UK Government’s approach. How can, for example, the Highlands and Islands be put in the same priority category as the City of London? Some in this chamber might want to reflect that such an approach will do little to tackle the widening gaps between the financial centre of the south-east of England and parts of Scotland that benefited significantly from EU support.

As Michelle Thompson noted earlier, when Michael Gove was asked about that disparity at a recent meeting of the Finance and Public Administration Committee, he said:

“The conclusion about whether funding has been distributed equitably will come at the end of the process.”—[Official Report, Finance and Public Administration Committee, 24 February 2022; c 24.]

The end of the process will be too late for many communities. What will we say to areas that have not had equitable funding? Do we just shrug our shoulders and say, “Oh well, you missed out. It wasn’t equitable, but that’s just tough luck; there’s nothing we can do now”? It is not good enough to say that the UK Government will address inequities in the allocation process once the process is finished—it will be too late by then; the money will have been allocated. There must be a way to continually assess and review, with proper community participation and engagement, to ensure that inequities are tackled before the process is finished.

We have heard from many speakers this afternoon about how the UK Government’s approach represents an attack on devolution. Organising funding allocations around Westminster constituencies indicates a level of either ignorance of or contempt for local and Scottish Government organising structures, never mind the lack of specifics around community participation or the requirement for Westminster constituency MPs to support bids.

The approach also means that strategic planning that cuts across regional boundaries will be impaired. Rather than enabling people to use the money to organise investment in the infrastructure of the future, including the infrastructure that is needed if we are to deliver the just transition, the approach seems to be focused on priorities that do not match those that the Scottish Government and many of our communities have identified for themselves. There is no clear prioritisation for delivering on net zero ambitions, tackling poverty and inequalities or reorienting our economy towards care and wellbeing.

For me, perhaps the core of the fund’s failure is that organisations and services that have been supporting our communities for years, if not decades, will suffer. The fund represents a real cut to communities and the services on which they rely. The whole levelling up agenda is supposed to alleviate poverty and inequality, but how that is supposed to happen is not identified in the plans. The allocation approach is regressive in comparison with the European regional development fund and the European social fund’s distributive methods. As Citizens Advice Scotland said, the proposals for the fund mean that it will be difficult for national voluntary organisations to access funding, which will mean missed opportunities for many people.

Therefore, the shared prosperity fund does anything but share prosperity. It will not help us to deliver the infrastructure that we need for Scotland’s future; it will not help organisations and communities to deliver the services and support structures that are needed to tackle poverty and inequalities; and it will not help us to invest in the fabric on which our society relies.

This UK Tory Government insists, yet again, on impoverishing us, now and in the future, following decades of failure to future-proof our economy and develop and sustain an industrial strategy that supports our society.

What we need instead is long-term planning—[Interruption.] I cannot take an intervention; I am just about to close and have no time.

We need genuine community regeneration that recognises local variations and specificities, by having governance and engagement structures that centre local voices. What the UK Government has developed is not that.

Photo of Emma Harper Emma Harper Scottish National Party

EU funding has supported infrastructure projects and community initiatives across our country since the 1970s. Projects that are crucial to our communities in Scotland have brought significant benefits to many areas.

That includes European LEADER funding, which the minister talked about in his opening speech. In Dumfries and Galloway, the funding has supported projects and businesses such as Dark Art Distillery in Kirkcudbright, which produces gin, Wigwam Holidays in Wigtown, Galloway and Southern Ayrshire Biosphere, and 7 Stanes and Glentress in the Scottish Borders.

It is hugely disappointing that future projects with as much potential as those will likely lose out. Supporting such projects is exactly what levelling up means to me; but the levelling up fund should be renamed “the losing out fund”, because Scotland will receive considerably less funding than it received before Brexit.

Photo of Emma Harper Emma Harper Scottish National Party

I will take an intervention from Liz Smith if she can explain how the funding will be equivalent to EU funding, after this boorach.

Photo of Elizabeth Smith Elizabeth Smith Conservative

I think that it is the member’s colleague, who I quoted earlier, who can explain that to her, because he has made it clear that the funding

“will transform Paisley Harbour, Abercorn Street with improved connections to Glasgow Airport and our Advance Manufacturing site which is currently under construction.”

Photo of Emma Harper Emma Harper Scottish National Party

I am coming on to funding. The member talks about an area outside Dumfries and Galloway, which is the region that I was referring to.

Photo of Finlay Carson Finlay Carson Conservative

Will the member take an intervention on that point?

Photo of Emma Harper Emma Harper Scottish National Party

No, I will not take another intervention.

This whole thing sticks in my thrapple. The UK Government’s shared prosperity fund is a failed attempt to replace the European social and regional development funds by cutting the funding given by the EU to communities the length and breadth of Scotland. Here are some of the facts: Scotland will receive £212 million, which is £337 million short of the £549 million that is estimated to be an appropriate replacement for EU structural funds. The overall Scottish allocation for the UK shared prosperity fund, which was earmarked to succeed the European funds, is only £212 million over three years. Even the third year of funding delivers less than Scotland received before our forced exit from the EU.

Photo of Finlay Carson Finlay Carson Conservative

Will the member take an intervention on that point?

Photo of Emma Harper Emma Harper Scottish National Party

No, I am sorry—I have taken one already. I do not have time.

The Scottish Government has calculated that a sum of £162 million per year would be needed to replace the European regional development fund and the European social fund, increasing to £183 million per year when LEADER funding and the EU territorial co-operation programmes are added. Those are the facts.

The UK Government has clearly failed to replace the EU funding and it has had five years to sort this. Again, Presiding Officer—“levelling up” means losing out. Scotland will receive considerably less funding than before Brexit. Not only does the shared prosperity fund provide Scotland with less benefit than we received as a member of the EU, but the lack of inclusion of decision making by the Scottish Government in the governance of the fund undermines devolution.

The Scottish Government has tried to engage constructively with the UK Government to ensure that funding is delivered in a meaningful way, consistent with the Scotland Acts and aligned with our fair work and equal opportunity aims. Unsurprisingly, the UK Government has undermined devolution by failing to give the Scottish Government a decision-making role and failing to meet the needs of Scottish communities, including third sector organisations.

The UK Government continues to develop and implement the levelling up fund without the consent, agreement, or engagement of this Parliament or the Scottish ministers. The Scottish Government has been excluded from meaningful or formal involvement in the process. Had Scotland remained in the EU, we would have had full involvement with the development of plans for this new programming period.

UK Government ministers are dictating where and how spending is allocated and bypassing our democratically elected Scottish Government, which previously set priorities for EU funding on behalf of Scottish people. One of those UK ministers, as my colleague Christine Grahame has mentioned already, is Westminster’s man in Scotland—the Scottish Secretary, Alister Jack. In February, he said:

“It wasn’t so long ago that the UK was sending huge sums of money to Brussels then receiving some of it back in the form of regional aid” and that the shared prosperity fund

“is far more effective than relying on the whim of ... bureaucrats ... the way of the past.”

That simply flies in the face of actual facts, as has been shown during the debate.

Through the shared prosperity fund, Scotland will receive reduced funds compared to what would have been received with EU membership. I have written to the Secretary of State asking him to show us how the UK shared prosperity fund will benefit Dumfries and Galloway and the Scottish Borders. However, as with my 12 other letters to him, on other issues, I have received zero responses—zero, nil, none.

The UK Government must fully devolve control of the fund tae oor Parliament. It is the Scottish Government that should decide how the policy and the funding are delivered in Scotland, in line with the agreed devolved settlement, not by out-of-touch ministers in London, fower hunner mile away.

It is not only the SNP saying that, as my colleague Fiona Hyslop mentioned in an intervention. It is supported by the House of Lords, the Scottish Affairs Committee, and the Institute for Government, all of which have said that devolved Governments should control funding in their own areas.

I support the steps that the Scottish Government is taking to stand up for this place, for the people of Scotland, and for devolution. Again, this losing out fund leaves Scotland worse off than we would have been with EU membership.

Photo of Murdo Fraser Murdo Fraser Conservative

It is only a few weeks since we last held a debate on the topic of the UK shared prosperity fund and I am a little bit surprised that, after such a short space of time, the Scottish Government has brought the subject back to the chamber. Perhaps it did not get enough negative headlines from its original attempt to stir up a grievance over the issue because, despite all the rhetoric that we have heard, it seems that it is getting very little traction outwith the ranks of the SNP.

Earlier in the debate, Liz Smith referred to the approaches that have been taken by bodies such as COSLA, which has been very supportive of much of the shared prosperity fund’s agenda and has welcomed the fact that the money is going straight to local councils. We have also heard from the Scottish Council for Voluntary Organisations, which takes a very different tone from the one that we have heard from SNP speakers in the debate. Indeed, the blog that Anna Fowlie, chief executive of the SCVO, published yesterday, concludes by saying:

“There’s much to be welcomed in the UKSF prospectus, particularly multi-year funding. It could offer opportunities for our sector.”

That is a very different tone from the one that we have just heard from SNP members.

Photo of Michelle Thomson Michelle Thomson Scottish National Party

Murdo Fraser has chosen to miss out a bit:

“When the Internal Market Act became law, it was evident that devolution had been blurred, some would say undermined.”

That was in the report too, or did he just miss that bit?

Photo of Murdo Fraser Murdo Fraser Conservative

I noticed that Michelle Thomson did not reference the part of the blog that talked about the politicisation by the SNP and the SNP’s approach to the grievance agenda. I dare say that, if the member wants to contribute again, she can make those points. Maybe the minister will do that when he is winding up.

The motion that is before us today in the name of Richard Lochhead makes a number of assertions. Every one of them is incorrect. At the start of the debate, Liz Smith set out the reasons why SNP scaremongering over the UK’s shared prosperity fund was based on an incorrect set of claims. It is worth reiterating some of those points.

I will start with the issue of money. It is accepted that the UK shared prosperity fund will be worth £212 million to Scotland initially. The SNP’s motion claims that an appropriate replacement for EU structural funds would be £549 million. However, the SNP, of course, is not comparing like with like. It seems to have included LEADER agricultural funding in its figure, when that is being funded separately.

Liz Smith made the point that legacy EU funds are tapering down, and Michael Gove, the Secretary of State for Levelling Up, Housing and Communities, has made it very clear that the shared prosperity fund will increase to replace those funds as they reduce over time. The commitment from the UK Government is very clear that the shared prosperity fund will match former EU funding—a fact that the SNP just does not want to recognise.

Let us listen again to what Anna Fowlie said, as she provides an objective voice in her blog. In relation to funding, she says:

“It appears that by year 3, and if you include other funds like Levelling Up, Scotland might not come out of it too badly.”

That is a very different tone from the one that we have heard from members on the SNP benches.

We did not hear from the minister or anyone in the SNP about what has happened to the £190 million. I raised that in a debate that we had in March. Last year, it was being reported by the Scottish Government that Scotland was facing a £190 million clawback from the EU due to irregularities in EU funding. What has happened to that £190 million? If the minister would like to intervene and tell me what has happened, I will happily give way. If not, he can deal with that point when he is winding up. All the rhetoric and fake indignation from SNP members is rather put into perspective by the fact that we are facing a £190 million clawback due to the SNP’s incompetence in handling EU money. That puts it all into some context.

Of course, what upsets SNP ministers and their colleagues is that money from the shared prosperity fund will go directly to councils, bypassing the Scottish Government. I can understand why the Government, with its tendency to centralise everything and its emasculation of councils, wants to go down that route. However, that approach has been warmly welcomed by those in local government, including some SNP councillors.

The SNP never likes to admit it, but Scotland has two Governments—one in Westminster and one in Edinburgh—and both have a role to play in contributing to local economic development, supporting skills and supporting the third sector.

Photo of Jim Fairlie Jim Fairlie Scottish National Party

I am delayed in making this intervention, because I am slightly confused. Murdo Fraser is constantly telling us that he wants issues to be put to local authorities to allow them to make the decisions, yet his entire party is campaigning against the parking charges that are going to be devolved to local authorities. Local authorities are going to be making those decisions locally, yet he is saying that we are not doing enough to give them local decision making. That does not make sense.

Photo of Murdo Fraser Murdo Fraser Conservative

Well, there we have it—the SNP in Perth is campaigning for the car park tax to be imposed on the people of Perth and Kinross. I am going to get that on the front page of every local newspaper between now and next Thursday—Mr Fairlie wants the hated car park tax imposed on people across Perth and Kinross. I very much welcome that clarification from him.

It is ironic that the SNP never complained about EU structural funds when the money was coming from the EU and the EU was setting the criteria. I was on the Finance and Constitution Committee in the previous session of Parliament, and I remember when we met people from the third sector who told us just how difficult it was to deal with EU funding, as Maurice Golden said in his contribution today, and just how obsessive the funding rules were. For example, everything had to be badged so that it was clear that the funding came from the EU.

Photo of Alison Johnstone Alison Johnstone Green

I ask you to conclude, Mr Fraser.

Photo of Murdo Fraser Murdo Fraser Conservative

The idea that there was in the past some golden age of EU funding for the third sector is simply baloney.

Liz Smith set out very well why the UK shared prosperity fund will be good for Scotland, for local authorities and for communities. That is why we should support it and support her amendment.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

From listening to the debate, I think that there are a number of questions that need answered. Is Scotland getting its full share of replacement funding? It is clearly not, and I suspect that it is not getting that replacement funding as quickly as the saved EU spend is being made available to the UK Government. Where is the remaining funding? If it is being held back, who has it? It is not extra money—it is replacement funding. Where is it?

From listening to the debate, we could conclude that the UK has top-sliced funds that were due to Scotland and used them for pet political so-called levelling up schemes, bypassing devolution, and has then been rationing spend, using the rationale that some continuing EU-funded schemes are yet to conclude. In the meantime, Scotland is losing out on millions of pounds of funds that are being saved now by the UK Government but are not being spent now. Top-slicing and rationing—not for the first time, a UK Government is selling Scotland short.

Is there a plan to tackle structural inequalities geographically or socially? Is there a coherent aligned strategy? Who decides? It is not the Scottish Government. How can the funding that is there go further through strategic alignment with other funding streams and priorities in a devolved Scotland? I am thinking, for example, of big net zero projects such as the European Marine Energy Centre in Orkney, which I understand has already expressed its concerns.

The absence of support for voluntary or community-based organisations that are tackling social inequality is very worrying, as we have heard from Citizens Advice Scotland, which is concerned about the focus on physical infrastructure at the expense of people.

There is also the matter of where gets the funding and why. The ludicrous position regarding how other EU funds have operated to the detriment of geographical needs in areas such as the Highlands is out of touch and out of line with need. Brexit has not finished—if anything, it is just getting started. Almost six years on from the vote to leave the EU, which Scotland did not vote for, there is still no clear or concise plan. It appears that it will be 10 years after the vote before EU replacement funds are matched, so Brexit has not even been done. It is almost as if the leaders of the vote to leave the EU did not expect to win, were doing it for internal Tory party manoeuvres, were shocked when they won and have been scrambling around ever since trying to put together an EU replacement plan without even understanding the international legal agreements that they have signed up to in the process.

The Scottish Government, working with COSLA and other partners, even proactively presented the UK Government with a plan that would have worked to replace EU structural funds. However, the UK Government has ignored the Scottish Government and COSLA, and it has once again ignored Scotland.

When the UK Government does come up with EU replacement schemes and funds, they fall well short not only of what is reasonable, expected or deserved but of what was promised in the 2019 Conservative manifesto. The promise may not have been written on the side of a bus, but it was made.

Even the most ardent Brexit supporter must be despairing of the UK Government. Only yesterday, a report by the London School of Economics and Political Science centre for economic performance stated that the UK’s count of product-destination export relationships per quarter shrunk by 30 per cent in 2021 following the EU trade and co-operation agreement. The centre reports a reduction in imports of 25 per cent, which will also affect exports. As we heard in the Economy and Fair Work Committee, it is not viable for lorries to return to the continent empty; therefore, export trade, as well as supply lines, will be disrupted. Replacement trade deals are not replacing those lost exports in any shape or form. The UK trade policy observatory stated that free trade agreements

“barely scratch the surface of the UK’s challenge to make up the GDP lost by leaving the EU”.

Where are the plans?

The Office for Budget Responsibility has pointed to a Brexit loss of more than £1,250 per person over the coming years, which is more than 178 times the most optimistic prediction of the benefits of the replacement trade deals. The OBR has also warned that UK trade “missed out” on much of the recovery in global trade and is lagging behind all other G7 economies.

I say to members to tak tent—if this is the best of Brexit Britain under Boris Johnson’s Conservatives, it is evidence of a shrinking UK Government. It is shrinking our exports, it is shrinking funds that are owed to Scotland with the fund that we are debating today, it is shrinking its influence and it is shrinking the respect with which it is held internationally. The evidence of lockdown parties during Covid is a clear demonstration that it is shrinking in its credibility, trustworthiness and values.

Scotland deserves so much better. We need decisions that are made in Scotland for Scotland. We need to be part of the European Union, with its genuinely shared decision making and its single market, which is the biggest in the world.

We can and will forge our own future by reflecting the values and vision of our country and what its people can achieve. Scotland can step out of shadows of the UK Government with independence, and join the world as a modern and progressive country.

The Presiding Officer:

We now move to closing speeches.

Photo of Paul Sweeney Paul Sweeney Labour

It has been interesting to listen to the debate, as much for what was not said, as for what was said. Diving into the technical detail of the administration of the fund is not what the people of Scotland need right now, in the midst of three intersecting crises—the cost of living, climate and productivity. We need to take bold, strategic and imaginative steps to address each of those crises. They are interdependent, and we need to get them right first time, because we cannot afford to wait.

The arguments that have played out today about the technical details of how inflation and exchange rates are calculated and used to uprate, and how that determines the extent of shortfalls, miss the point most spectacularly.

We agree with the Government and we agree with the Treasury Committee. In fact, the broad consensus is that, notwithstanding the technical arguments, the shared prosperity fund does not address the scale of the challenge. The Conservatives cannot dispute that and it must be addressed. Although we agree with the broad intention of the fund, it will not deliver the stated outcomes. That is worse than just admitting that it will not deliver. We need to get a grip of the issue.

The role of structural funds is to support our communities, and fighting over which centralised administration should administer them wastes energy and serves nobody. The funds must be delivered

“as close to communities as possible”,

as asserted in the Labour amendment, which is a positive enhancement to the Government motion.

It is vital that the Tory Government reassesses the amount that it is making available, in line with calls from devolved Administrations in Wales, Scotland and Northern Ireland. It is an opportunity to build on and vastly improve what was available through the European Union, rather than to have cut resources and managed decline.

That is true in Scotland, too, because, cumulatively, we have seen £6 billion cut from local government over the past decade. I noted the points that various members made about that during the debate. For example, Maurice Golden talked about Dundee cutting off its nose to spite its face, as it is not applying for funding because of who is administering it. I find that to be egregious misconduct in public office, frankly.

My Glasgow colleague John Mason mentioned what I understood to be, in economic geography, the core-periphery model and the nature of economies of agglomeration. The point made was that, somehow, London’s growth will affect and be to the detriment of Scotland. I am not quite sure how one addresses that, unless the member is proposing immigration and capital controls, which I am sure would be problematic to say the least. We have to build with the grain of where great global cities are going, which is where Glasgow’s opportunities lie.

However, the cuts to Glasgow City Council over the past 10 years have been disastrous. We see that tangibly in the member’s constituency. The People’s Palace, which is a great international icon, is lying derelict, with its glasshouse falling apart as a result of the city’s parks budget being cut by 70 per cent in the past decade, because non-ring-fenced funding for the council has been cut by more than £1 billion. Now, the only option for the council is to apply to the UK Government levelling up fund to get money to repair the glasshouse.

The system is broken and there needs to be more humility from all parties about how we fix the fundamental failure of local government since the settlement in 1996. That issue has not been brought out in today’s debate at all, which is a great pity.

When we look at the economic geography of Glasgow, we see that it has a high level of gross value added but that it has relatively low household incomes. However, the neighbouring local authorities have quite low levels of gross value added but high household incomes, because people are coming into Glasgow, earning money and retreating to the suburbs, where they pay no tax towards the city region, its economic growth or for its public amenities.

The inequality of economic geography is as much of a problem in Glasgow as it is in London. We need to assess that dispassionately and with greater rigour when we are looking to solve the problem of inequality in Scotland. I am afraid that the approaches that the Conservative UK Government and the Scottish Government are taking will not solve that—and that is certainly the case on the basis of the engagement in the debate.

I agree with the point about tax havens and the extraction of wealth, but that is happening in Scotland as much as it happens anywhere else, when we look at land ownership and rent extraction by private owners of our country’s natural treasury. We need to fundamentally address that. I say that partly in response to John Mason’s question about where we raise revenue from. We need to get to grips with that. My colleague Richard Leonard made that point; the state has hitherto poorly managed state aid and allocations, and the Institute for Fiscal Studies agrees with that. We need a much more fundamental debate about state aid effectively functioning as a means of crowding in wealth to our communities and building investment and prosperity, rather than it being a function of transferring wealth from the state to private capital, which is usually foreign owned. That is an extraction of profits, with the assets physically retreating, as we saw with silicon glen. It is largely a story of failure in Scotland.

Mr Leonard spoke about Ravenscraig and Linwood. I agree that those were opportunities that were destroyed in a vicious orgy of economic vandalism by the Conservative Government 30 years ago. We still need to learn lessons from that today. Recently—in the past three years—there was a long campaign in the north of Glasgow to save the Caley railway works. The experience of that campaign showed me that laissez-faire economics is very much de rigueur at both St Andrew’s house and in Whitehall. The ping-pong between both Governments abrogating responsibility was, frankly, a disgrace. The upshot is that we have 163 years of railway engineering lying rusting on Springburn Road, when the Scottish Government could have bought the works and utilised the site as a national centre of engineering excellence.

Those are just a handful of examples of how funds are not being well utilised and directed.

The Presiding Officer:

You must conclude, Mr Sweeney.

Photo of Paul Sweeney Paul Sweeney Labour

That is why we need a fundamentally new approach, as the Labour amendment to the motion suggests.

Photo of Donald Cameron Donald Cameron Conservative

Here we are, for the third time in less than a year, debating the investment that is going to Scotland’s communities via the UK’s shared prosperity fund. For the third time, the SNP has manufactured yet another row to complain about that.

As surely as night follows day, an SNP grievance follows a positive funding announcement from the UK Government. I think that this is the only Government, anywhere in the world, that takes issue with money being passed directly on to the people who they are elected to represent.

The central complaint at the heart of the motion is that the Scottish Government does not get to have its own way over how this funding is distributed for local communities. It does not get to put its own spin on spending announcements. It does not like the fact that local communities will get to spend the money on their local priorities and not those of the SNP.

Let us look at the Government motion in more detail. It reiterates the complaint that the shared prosperity fund falls short of what would have been provided through the former EU structural funds. My colleagues Liz Smith and Murdo Fraser have gone over the figures and, as Liz Smith so aptly put it, our party fully supports the principle that any funding distributed from the UK shared prosperity fund should at least match what was distributed from EU structural funds. Indeed, it is the stated ambition of the UK Government that it exceeds that. The UK Government has confirmed that the funding will match the previous EU funding from the European social fund and the European regional development fund. By 2025, it will match those funds in real terms.

Today, we hear that the funding announcement does not directly match that amount. However, as Michael Gove confirmed to the Finance and Public Administration Committee in February, the fund

“ramps up over time as the EU legacy funding diminishes ... As those funds wind down, the UK shared prosperity fund will ramp up to fill the gap, until eventually all legacy EU funding of projects ends.” —[Official Report, Finance and Public Administration Committee, 24 February 2022; c 1, 2.]

Of course, it is deeply ironic that the SNP has come to this chamber to complain about missing money. What has happened, as Murdo Fraser said, to the £190 million clawback? The SNP is a party that has gone wildly over budget on two ferries that have not even left the dock. It is a party that has overseen £40 million blown on malicious prosecutions against the administrators of Rangers Football Club. The SNP has some brass neck coming to the chamber to complain about how money is or is not being spent.

The motion also repeats the suggestion that the shared prosperity fund undermines devolution, and that point has been made by many in the debate. At no point since 2007 has the SNP complained about the EU injecting funds into local communities, but now that the UK Government is doing the same, it is aghast. As I have said many times before, the Scotland Act 1998, which underpins the devolution settlement, allows direct investments from the UK Government to devolved policy areas. There is nothing to prevent that happening. That is not undermining devolution; it is strengthening it. It is itself devolution. The Scottish Conservatives fully support the UK Government working more closely with local government in Scotland to deliver on their priorities—something which has been sorely lacking under the centralising SNP Government.

Of course, the shared prosperity fund is not the first intervention by the UK Government to support communities in Scotland. Several cities and regions are benefiting from £1.5 billion-worth of growth deals. There will be two new free ports in Scotland, backed by £52 million of investment. Glasgow is to benefit from a share of £100 million in research and development funding for an innovation accelerator. I could go on—for example, the UK Government is creating new jobs by moving some of its departments out of London and into Scotland.

The SNP Government goes on to claim that third sector organisations will be impeded by the shared prosperity fund—again, a claim that does not stand up to scrutiny when the facts are considered. Let me tell the SNP Government what Scotland’s third sector has said about the shared prosperity fund. The Scottish Council for Voluntary Organisations represents thousands of small voluntary bodies working in a huge range of places across Scotland: 2,000-plus charities, voluntary groups and social enterprises. Its chief executive said:

Scottish Ministers’ outrage at funds going straight to local decision-making feels disingenuous when community empowerment is a key strand of Scottish policy.”

That is, the Government’s

“outrage ... feels disingenuous when community empowerment is a key strand of Scottish policy”.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I have looked at Anna Fowlie’s blog. She also says that she expects the shared prosperity fund to replace the EU funds that were lost to Scotland through Brexit and to respect the Scottish Parliament and Scottish devolution. Will the member accept that both of those promises made by the UK Government have been broken?

Photo of Donald Cameron Donald Cameron Conservative

I will not accept that for one minute. I have covered those matters previously, and I will cover them again, if the minister really wants me to.

The chief executive of the SCVO is not wrong about the disingenuity of what is happening. Civic Scotland knows exactly what the SNP is up to: it is preaching community empowerment on the one hand and then complaining about it on the other. She goes on to say that the UK shared prosperity fund

“does strongly encourage engagement with the third sector”,

that

“There’s much to be welcomed in the ... prospectus, particularly multi-year funding”,

and that

“It could offer opportunities for our sector.”

What makes the SNP position all the more absurd is the fact that many of its councillors back the new fund. In fact, SNP-run councils have received £172 million in the first tranche of investment from the levelling up scheme. The shared prosperity fund will make it easier for communities to access vital funds. Gone are the days of EU bureaucracy, which often made the process of accessing funding too cumbersome for smaller organisations and charities, as Maurice Golden so powerfully argued.

The UK Government has confirmed that

“there will be far more discretion over what money is spent on” and that

“EU requirements for match funding, which impacted on poorer places, will be abolished.”

It adds:

“Instead of regional agencies, funding decisions will be made by elected leaders in local government, with input from local members of parliament and local businesses and voluntary groups.”

That means local decisions being taken by local decision makers, which is something that is anathema to the SNP.

Yet again, we have come to the chamber to hear more grievance from the Scottish Government. Rather than welcome the positive news of more funding for local communities, less bureaucracy and more local decision making, we get another confected row. We on the Conservative benches believe that the people who make the best decisions on funding are local communities, which is why we back the shared prosperity fund and Liz Smith’s amendment.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I thank all members for their contributions to the debate, which is about the future of Scotland, our economy and our communities, and about ensuring that we have appropriate investment to align with all the country’s priorities to create a fairer and more prosperous country.

Liz Smith and Murdo Fraser seemed pretty bored by the fact that we are, once again, debating the fate of EU funds and the shared prosperity fund. However, the reason for today’s debate is that, since we debated the issue previously, the UK Government has confirmed its plans and published its prospectus for the shared prosperity fund. From that, we now know that we have two key broken promises. First, the lost EU funds as a result of Brexit, which Scotland did not vote for, are not being replaced by the UK Government as promised. Secondly, the promise to respect Scottish devolution and the Scottish Parliament is not being fulfilled—it is another broken promise. That fundamental milestone from the UK Government is why we are back in the chamber today to have this debate and a vote.

Photo of Murdo Fraser Murdo Fraser Conservative

In the previous debate on the issue, at the beginning of March, I asked the minister whether he could update members on the £190 million that the EU was threatening to claw back from the Scottish Government due to irregularities in the handling of EU structural funding. He did not respond to that question then. Can he do so now?

Photo of Richard Lochhead Richard Lochhead Scottish National Party

First, I am certainly not aware of that figure. Secondly, all Governments, including the UK Government under the Conservative Party, have to deal with clawbacks and with compliance and audit requirements. I am sure that we will continue working with the EU authorities.

The Conservative Party wants to talk about what we are getting through the shared prosperity fund and not what we are not getting through it. According to the Conservative Party, our highlighting of the nearly 60 per cent shortfall in funds that we required from the EU replacement funds is manufactured SNP grievance. However, those issues are being highlighted throughout the UK. I noted previously that former Tory chancellor George Osborne has said that the current allocations are unfair. The Welsh First Minister, Mark Drakeford, said on 13 April that his nation stands to lose out by £1 billion over three years while having less say over how the money is spent. He said:

“This is not levelling up, it’s levelling down.”

The director of the Northern Powerhouse Partnership in the north of England said that the shortfall amounted to a 43 per cent cut over three years, while authorities will lose the long-term security provided by the seven-year allocations offered by the EU. He said:

“We were promised that no nation would be worse off post Brexit but, when you take out the smoke and mirrors, the data doesn’t lie.”

There have been references to the Westminster Treasury Committee, which stated that the shared prosperity fund represents a 40 per cent cut from the equivalent EU funds, and a think tank in the north of England, the Institute for Public Policy Research, which said that the fund represents a 43 per cent cut in real terms. However, according to the Conservative Party, that is all SNP grievance and manufactured complaints. The issue of broken promises amounts to the fact that we now have a shortfall over the next three years of £337 million—we have to recognise that.

I will address a couple of issues that members raised. The Tories spoke about welcoming the autonomy of local authorities. We should remind the Conservative Party that the UK Government has given local authorities a menu to choose from—we heard from Conservative members that it is important for addressing the cost of living crisis—but that fixed menu of options that the money has to be spent on covers things such as landscaping, local art exhibitions and a range of other issues; it is not for the urgent issue of addressing the cost of living crisis. Please understand what the UK Government proposes to deliver.

I have to pick up on Richard Leonard’s point that we were wrong to say that we face a £150 million shortfall in the coming financial year—a point that the Conservative Party also made. It is a technical but important point. We are allowed to continue to spend money from the previous programme for two or three years after the programme period, and we are doing that at the moment. We would have been entitled to call down from the new European programme, but we are not part of that due to Brexit. We could have spent that money at the same time as we spent money from the previous programme. The UK Government is ignoring that lost cash, so we are losing £150 million in the coming year that is needed to tackle to cost of living crisis and other issues in our society.

I should also mention that the Cornwall Live news website has a headline that says:

“Cornwall set to get less than half of its replacement EU funding but Conservatives welcome announcement”.

We could equally have a headline in this country that says, “Scotland is getting only 40 per cent of what is required from EU replacement funding, but Boris Johnson’s Conservatives in the Scottish Parliament welcome announcement”. I ask the Conservatives to please look at the truth of the issue and stand up for their constituents, their communities, the Scottish Parliament and devolution.

There are various differences between the shared prosperity fund and the EU structural funds. The EU funds were delivered over a seven-year period, which gave recipients of investment certainty and the ability to develop long-term strategic plans—strategic plans are important for this country’s future—that would not fall prey to political cycles or the whims of the endless conveyor belt of UK Cabinet ministers. The shared prosperity fund is connected to the UK Government’s budget cycles and, as such, lasts for only three years. That is a big reduction in certainty, which impacts not only planning but the sense that key themes for investment priorities may frequently change.

I also want to talk about the issue of scale. Michelle Thomson made the point that it is important that the limited shared prosperity fund that we are getting is aligned with Scottish Government priorities, but, because devolution and the Scottish Parliament are being ignored, that will be more challenging. I assure Michelle Thomson that the Scottish Government will continue to liaise with local government to make sure that we are aligned on this country’s priorities for net zero, Covid recovery and other areas.

That lack of a strategic approach is important. Moray, which I represent, is part of the University of the Highlands and Islands, and I have made the point to the chamber several times that the University of the Highlands and Islands was established largely thanks to European funding. The new shared prosperity fund would not make that possible, because no one local authority would necessarily be able to support the establishment of a region-wide university to provide higher education to give young people an incentive to stay in their local area.

As I said, under the Conservative Party’s shared prosperity fund, the Highlands and Islands, which is an area that faces some of the biggest development challenges, will have a smaller share of a smaller pot. Douglas Ross, who is sitting here and who represents the Highlands and Islands region, will vote for a cut in funding for the Highlands and Islands, which will get a smaller share of a smaller pot under his London Government’s proposals. That is why we have to resist this.

Photo of Douglas Ross Douglas Ross Conservative

The minister is asking us to resist this. Does he honestly believe that this is anything other than devolution working in practice—two Governments able to invest anywhere in Scotland? What the people across Scotland, the Highlands and Islands and Moray do not understand is why the SNP Government does not want that investment going into their local areas.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

One of the ironies is that Douglas Ross sits in both the Scottish Parliament and Westminster, which perhaps illustrates that he has never really been a fan of Scottish devolution. If one takes his argument to its logical conclusion—

Photo of Richard Lochhead Richard Lochhead Scottish National Party

Douglas Ross wants to just scrap the Scottish Parliament and let Westminster take all the decisions.

With regard to the strategic projects of scale that were funded with European funding, which will face massive challenges because of the way in which the shared prosperity fund is designed, we have Zero Waste Scotland’s resource efficiency circular economy accelerator programme, which received £22 million of ERDF funding—

The Presiding Officer:

The minister is closing.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

Apologies—I have taken a few interventions.

That national project is good for small and medium-sized enterprises, it develops our circular economy in Scotland and it supports community-based organisations. We also have Skills Development Scotland’s apprenticeships programme, which gets £77 million through the ESF—the current European programme—and which has helped thousands of Scots to learn new skills, gain qualifications and work at the same time. All those things will be nigh on impossible under the shared prosperity fund, not just through a lack of funding but because of the way in which it is designed in the first place.

The Scottish Funding Council’s developing Scotland workforce programme receives £40 million via the ESF, providing additional college and university places to address regional skills gaps and shortages in key employment sectors.

The Presiding Officer:

Could you conclude, minister?

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I will come to a conclusion shortly.

We also have NatureScot‘s green infrastructure fund—

The Presiding Officer:

You will come to a conclusion now, minister. Thank you.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

Just to finish, Presiding Officer, I urge Parliament to express the fact that we want the UK Government to fulfil its promises and pledges that were made to the people of Scotland through Brexit by voting for the motion today.

The Presiding Officer:

Thank you, minister. That concludes the debate on the UK shared prosperity fund’s implications for Scotland.