'No failure' over three-year absence of Highlands and Islands RSA funds, argues Derek Mackay

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Scotland's Economy Secretary has defended a funding scheme which has not given a single grant to any business in the Highlands and Islands in three years.

Derek Mackay argued that there was no "systemic failure" from Regional Selective Assistance (RSA) funding, despite Highlands and Islands companies receiving none of the 209 grants handed out by the Government since 2016.

RSA funding is aimed at supporting business projects that could help or create jobs, and is managed by Scottish Enterprise.

More than £230 million has been given out in grants since 2015, but Scottish Enterprise revealed that no business from anywhere in the Highlands and Islands have successfully applied for the funding during the last three years.

Derek Mackay argued that there was no "systemic failure" from RSA funding. Picture: John Devlin

Derek Mackay argued that there was no "systemic failure" from RSA funding. Picture: John Devlin

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Holyrood's Economy Committee raised the apparent discrepancy with Mr Mackay, who suggested there was a lack of demand from rural businesses for the funding.

Mr Mackay told the Committee that the grants were "demand-led" and said that he has been "assured" that if companies and projects from the Highlands and Islands met the criteria they would have been awarded grants.

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"We want to make sure that it can be deployed across Scotland, of course we do, but I wouldn't put a value judgment on where projects are actually being delivered, so long as we are being assured that we are proactively promoting it across the country," he said.

"Would I like to see further distribution of RSA across the country? Of course.

"But I think it's certainly not down to any systemic failure - it is down to demand and projects meeting criteria and then being delivered on the ground."

He added: "Why would it be in Scottish Enterprise's interests not to support companies to deliver that?

"I'm reassured because I don't see a reason why they wouldn't try to encourage companies right across the country to benefit from RSA."

Citing the work of Highlands and Islands Enterprise, which has provided £89 million of region-specific assistance to businesses over the last five years, Mr Mackay said that the Government's economic strategy was to spread benefits across the country, arguing that the relative impact of 20 jobs in a rural community "could be massive" compared to the equivalent in Scotland's cities.

Mr Mackay also gave evidence about the Scottish Government's preparation to deal with the financial impact of leaving the European Union, calling for more money from the UK Government and urging them to "fully fund the consequences of a no-deal Brexit".

MSPs heard that Mr Mackay does not believe that the UK Government is making a "serious effort" to secure a deal with the EU, adding: "I fear that Boris Johnson is about EU exit at all costs, and the collateral damage will be the economy and the communities of the whole of the UK."

Explaining that the Scottish Government had received £98.7 million in additional funding from Barnett Formula consequentials as a result of UK Government spending on Brexit preparation, Mr Mackay revealed that they have already spent, or committed to spend, £92 million.

Citing volatility and economic uncertainty around Brexit in response to a question from Scottish Labour MSP Jackie Baillie about whether he planned additional borrowing to mitigate the impact of Brexit, Mr Mackay claimed he was "very limited", and said: "I don't think the borrowing powers we have around resourcing capital are adequate.

"Unless there's extra resources coming to Scotland then we can't fully fund the no-deal Brexit plan."