Third Report - The UK Shared Prosperity Fund and Scotland

We welcome the UK Government’s original intentions to formally consult on the UK Shared Prosperity Fund (UKSPF), and its early efforts to engage local authorities in Scotland. However, we are concerned that a formal consultation has not taken place, given that the UKSPF is due to commence next year. The uncertainty is hindering planning efforts and poses risks to a smooth transition from EU funds to the UKSPF. The UK Government must launch a formal, public consultation on its proposals for the UKSPF by autumn 2021.

The UKSPF could bring significant benefits to Scotland if it is designed and delivered effectively. Collaboration between the UK and Scottish Governments and local authorities will be vital to ensuring that the UKSPF uses the expertise built up through decades of delivering EU funds and benefits the people of Scotland. We urge the UK and Scottish Governments to work constructively together in the design and delivery of the UKSPF.

We welcome the UK Government’s commitment that all UK nations will receive at least the same amount of funds under UKSPF as under the EU Funds. It is, however, unclear how much funding will be available per year, even as an average. The UK Government’s multi-year funding profile should clarify how much funding will be available each year for the UK and for Scotland for at least the first five years of the UKSPF. The UK Government’s multi-year funding profile should clarify how much funding will be available each year for the UK and for Scotland for at least the first five years of the UKSPF.

The UK Government must clarify how and when EU rural development funding, including the European Agricultural Fund for Rural Development (EAFRD) and European Maritime Fisheries Fund (EMFF), will be replaced. Otherwise, there is a risk that expertise and capacity built up through delivering those funds will be lost. (Paragraph 19) Allocation of funding

It is unclear how the CRF will feed into the development of the UKSPF. In March 2022, a year after it began, the UK Government should evaluate the Community Renewal Fund and publish its findings on how well the fund has operated. This evaluation should highlight implications for the design and delivery of the UKSPF.

A lack of transparency in the selection process for the UKSPF could damage trust in the fund and those delivering it. The UK Government should ensure that its methodology and criteria for allocating UKSPF funds are clear and transparent.

We welcome UK Government support to help local authorities build their capacity to develop bids. In its response to this Report, the UK Government should clarify 14 The UK Shared Prosperity Fund and Scotland how much funding has been given to local authorities in Scotland to help them build capacity in developing bids for the UKSPF. In its response to this Report, the UK Government should clarify how much funding has been given to local authorities in Scotland to help them build capacity in developing bids for the UKSPF.

The UK Government should prioritise academic research funding when allocating resources under the UKSPF. The UK Government should collaborate with the Scottish Government, to ensure that regions where structural funding for universities has brought significant regional benefits, are not disproportionally disadvantaged by the transition to the UKSPF.

We recommend that the UK Government evaluates the progress of the UKSPF after one year of operation and publishes a report, to ensure that funding is delivering the levelling up agenda by being allocated to the areas and sectors of greatest need. (Paragraph 33) The UK Shared Prosperity Fund and Scotland 15