Professor Andy Porter: Development funds must match what we are losing from Brexit

As the relationship between the UK and the European Union moves into a new chapter, the UK’s participation in EU regional policies, including European Structural Funds, will formally end in December.

Professor Andy Porter, Vice-President for Business, Royal Society of Edinburgh

The funding, through the European Regional Development and European Social Funds has sought to address regional disparities, tackle inequality and improve employment opportunities. Under the current 2014-2020 programmes, Scotland benefits from more than £780 million of Structural Funds. While the funds are relatively small compared to domestic public spending commitments, they have been a valuable and sustainable source of additional funding in Scotland, with some areas, notably the Highlands and Islands, benefiting significantly.

The UK Government intends to establish a successor programme to the Structural Funds called the UK Shared Prosperity Fund. However, considerable uncertainty remains around the design of the fund, the level of investment and how it will be used and distributed. The Scottish Government has been consulting on how the fund should be designed to ensure it meets the needs of ­Scotland’s people, communities and businesses.

To help inform this work, the ­Royal Society of Edinburgh (RSE), Scotland’s National Academy, hosted two thematic roundtables in January on innovation and skills. The RSE roundtables brought together representatives from the Scottish Government, skills and enterprise bodies, universities and colleges, business and industry, and knowledge exchange organisations among ­others to ­discuss how successor funding can be developed to support innovation and skills needs in Scotland.

The RSE believes that the following principles should apply to the development and administration of the UK Shared Prosperity Fund – that the devolution settlement is respected with strategic guidelines agreed between the UK Government and the devolved administrations; that the Scottish Government and its partners have responsibility for delivery of the fund in Scotland; and that the funding allocated to ­Scotland should be no less in value than that which it replaces. The successor funding should add value to, and not be a substitute for core public spending in Scotland, particularly with the aim of reducing regional inequalities and supporting inclusive economic growth. There is now an opportunity to think creatively and develop a new approach to meet Scotland’s needs.

The successor funds could be used to enhance leadership skills, including in Scotland’s small and medium-sized enterprises to support our ­businesses to innovate and, in turn, benefit our local, regional and national economies. Funds might also be used to support social innovation in addressing complex societal issues, including climate change and health and wellbeing.

The experiences of those in receipt of EU Structural Funds indicate that they can be bureaucratic and ­complex to access, administer and monitor. The administrative arrangements for future ­funding should therefore be kept as light touch as possible, while providing for appropriate oversight.

This would be a welcome development for public and third ­sector bodies in Scotland, including local authorities, who play a leading role in delivering Structural Funds projects, as would relaxing the ­current requirement that EU ­funding be match-funded, which normally falls to under-resourced public ­sector bodies, and can constrain their ­ability to bid for funding.

EU Structural Funds have ­supported a wide range of projects in ­Scotland that most likely would not have proceeded, at least not at the same scale or pace, without such funding. ­However, whilst acknowledging that Structural Funds have had a ­positive impact on Scotland, it was also acknowledged, at the RSE roundtables, that data and ­information have not been collected systematically to fully evaluate this impact.

It will therefore be crucial to ensure that a more detailed commitment to evaluation is built in from the start, hopefully without becoming too time-consuming or onerous, as we develop this successor funding.

The RSE looks forward to working with both the UK Government and the Scottish Government as the plans are developed for the replacement funding. The report of our ­roundtable discussions can be found on the RSE website at www.rse.org.uk/wp-content/uploads/2020/02/AP20_01.pdf

Professor Andy Porter, vice-president for business, Royal Society of Edinburgh.