DGCouncil discuss replacement of European Structural Funds (ESF) in Scotland, post EU-Exit

Members of Economy and Resources (E&R) Committee (30 Jan) will be asked to agree draft responses to the Consultation on the replacement of European Structural Funds (ESF) in Scotland, post EU-Exit and to ensure that stakeholders provide their input, experience and expertise to the development of the replacement.

 European Structural Funds have been an important support of economic development projects in the South of Scotland. Our region currently has funding of £4,329,589 from ESF for the period 2015-2022. The Employability Pipeline Strategic Intervention programme is the main recipient of the funding, but this project is due to end in 2022.  The UK Government have indicated that all funding previously agreed with the European Union programmes will continue to receive funding through to the end of their programmes.

It has proved difficult to attract ERDF and ESF assistance for projects from the EU Structural Funds in the South of Scotland since 2010 because:

  • The area was not part of a NUTS2 region, benefiting from higher levels of EU support and increased intervention levels, despite its very low level of GDP per head.
  • An increasingly national approach has been taken by the Scottish Government to the allocation of EU Structural Funds with a focus on distributing funds directly through Agencies.
  • The high levels of match funding needed to fund projects within the national programmes and the onerous and shifting audit requirements.

 In Scotland in the period 2014-20 there are four NUTS2 areas i.e. Eastern Scotland, South Western Scotland, North Eastern Scotland and the Highlands and Islands. D&G is included in the South Western Scotland NUTS2 area. The effect of this has been to mask the significant intra-regional inequalities in performance between Scottish Borders and the wider Eastern Scotland NUTS2 area, and Dumfries and Galloway and the wider South Western Scotland NUTS2 area.

Following feedback from the Scottish and UK Governments, that the population of the South of Scotland (i.e. Dumfries and Galloway and Scottish Borders) was too small to be designated as a NUTS2 region, a wider Southern Scotland area proposal was developed with South Lanarkshire and the three Ayrshire local authorities. The new Southern Scotland NUTS2 area came into force in 2018. Tellingly, Southern Scotland is now the NUTS2 area with the lowest GDP per head in the UK.



Chair of E&R Committee, Rob Davidson said: “Being grouped with the other areas in the West, which includes Glasgow, means that our rurality was often ignored as the focus is on the larger cities. It also affected our GDP per head. It is important to recognise this. Through the current formula when we are compared to London GDP per head, this creates the widest regional disparity in Europe. Provided members agree, I will now write to our local Members of the UK and Scottish Parliaments to outline our position and to request support towards the future funding following the UK exit from the EU. This reaffirms our view that future funding should be based on the 2021 recognised NUTS 2 regions.”

Vice Chair, Archie Dryburgh said: “The focus of this funding should be NUTS2 regions such as Southern Scotland which require additional support to tackle challenges which arise from our geography, population imbalance and low income. Place is an important part of this so regional bodies need to be empowered to make our own decisions on projects to be supported with long-term funding assistance.”