Plugging the European funding gap

Eu funding

Jamie Flaherty analyses where Scotland stands in securing a replacement for European Union funding 

TFN Guest's photo

9th July 2020 by TFN Guest 0 Comments

Following the UK’s decision to withdraw from the European Union (EU), many questions were raised as to the issue of crucial EU funding and how it will be replaced. Many voluntary organisations throughout Scotland are dependent on these funds to deliver key services which address poverty related issues, whether directly or indirectly, throughout the country. This is funding which needed now more than ever as the country begins to assess the likely lasting impact of coronavirus on poverty and inequalities.

Debate over the current fund and its successor comes at a time where child poverty is set to increase across the country, affecting poorer areas of the UK worst. This is a trend which pre-dates both the coronavirus pandemic and the Brexit vote and is largely driven by UK level decision-making within Westminster in relation to housing, social security, the labour market and more. This clearly illustrates the need for decisions to be made swiftly regarding successor funding following the UK’s final withdrawal.

Currently, EU funding which aims to address inequalities between regions is delivered through three main funds: the Cohesion Fund (reduce economic and social disparities); European Regional Development Fund (strengthen economic and social cohesion in the EU); and the European Social Fund (improve employment and education opportunities across the EU and people at risk of poverty), known collectively as the structural funds.

Tackling poverty and inequality was cited by the Scottish Government, the structural fund’s managing authority in Scotland, as a key strategic intervention and is expected to be included as one of the main ambitions of its replacement. However, there is a lack of clarity on what exactly this replacement will look like, who will manage it and how much money will it have to distribute? Will it go beyond EU funding, will it fall short or will it be a direct replacement? The UK voted to withdraw from the EU in June 2016, yet here we are in July 2020, with no firm confirmation of how the UK Government intends to plug a funding gap, which without a resolution, will have massive ramifications for voluntary sector organisations tackling poverty and those that depend upon its services.

Whilst the true extent of Brexit’s impact on poverty in Scotland remains unknown at this time, future-gazing analysis estimates that withdrawing from the EU is unlikely to be felt in the same way throughout the whole country. Regional variation is expected to worsen, given that certain areas rely heavily on EU funding, meaning that the need to have clarity on a replacement fund is pivotal. Analysis estimates that in the UK an additional €1 of regional EU funds per head raises raise average per-head incomes by €1.87. Furthermore, EU funding has supported more than half a million unemployed or economically inactive people into jobs. Following the UK’s decision to leave the EU, Scotland will no longer be qualified to access these funds, with the Highlands and Islands of Scotland expected to lose approximately £47 per head per year, with the rest of Scotland losing up to £171 per head. Funds, that as evidenced above, are crucial to alleviating poverty across the country.

So what do we know? Whilst we are not totally in the dark regarding a replacement fund, information remains in shorty supply. The UK Government announced that the replacement funding would come in the shape of the UK Shared Prosperity Fund with a consultation due on the fund expected in late 2019, which failed to materialise. The most recent pre-coronavirus budget (which is now mostly irrelevant), delivered by Chancellor of the Exchequer, Rishi Sunak MP, in March had no detail on the fund other than announcing that ‘further plans’ could be expected as part of a forthcoming Comprehensive Spending Review. If the government intends to consult on its plans, it has given itself an extremely short window of time in which to gather views, between the Spending Review and the UK finally leaving the EU in its entirety, expected 31 December 2020. Nonetheless, the lack of information and consultation on the fund, regardless of timelines, is extremely worrying for voluntary organisations in Scotland who are fighting to alleviate poverty up and down the country.

Jamie Flaherty

Jamie Flaherty

The Scottish Government launched its own consultation on the replacement fund at the end of 2019, with input sought on future priorities, management and methods of distribution. Working in partnership with the Human Rights Consortium Scotland, SCVO held events in Glasgow and Inverness to gather the views of voluntary organisations, which were attended by over 50 representatives from across the sector. These views helped feed into SCVO’s submission to the consultation which outlined a number of key common areas the sector believes should be a priority, with tackling poverty featuring prominently.

In relation to tackling poverty, SCVO proposed the use of new measurements for assessing impact such as utilising the Scottish Index of Multiple Deprivation (SIMD). The SIMD is a relative measure of deprivation across 6,976 small areas. If an area is identified as ‘deprived’ this can relate to low income but it can also mean fewer resources or opportunities. By factoring this measure into funding allocations it would allow for the funds to be targeted not at the Scottish regional or local authority areas but at the specific locality areas who are identified using the index as being in most need of assistance. By adding this metric into the way in which funding is distributed it would allow for the successor fund to identify priority areas suffering from significant poverty related challenges and allow local organisations to take action. However, in order to allow these local organisations, who are often best placed to make decisions on how the funding can be effectively utilised to tackle poverty, further powers must be devolved to a local level.

SCVO heard from a wide variety of organisations that the most successful projects, supported by the current fund, have been ones driven by the voluntary sector, regional and local authorities, other non-governmental organisations, colleges and universities. According to SCVO members, the success of these projects was down to the delivery being locally based with the Scottish Government only participating as Managing Authority. In the current programme of funding, it is difficult to identify how decisions are made when agreeing spending priorities. A return to regional led delivery would provide the replacement fund with up to date relevant information on the local action that is required to address poverty and inequalities within local areas.

The successor fund also has the opportunity to open itself up to smaller organisations who are often tackling poverty at the frontline. The current process is often cumbersome and exacerbates already limited capacity and resource challenges faced by anti-poverty organisations throughout Scotland’s voluntary sector. To improve participation, the new fund needs to be simple and streamlined with minimal duplication of effort. Many smaller organisations have failed to engage with the fund in its current iteration due to its complexity. Evidence highlights that the increasing, and ever-changing, complexity involved in applying for, and reporting on, EU funding programmes has led to a reduction in the amount of funding being accessed by voluntary sector organisations. SCVO and our members are keen to see that the replacement fund does not suffer from this same challenge.

Regardless of the priorities of the new fund, a new application and funding delivery system will be crucial to any further ambitions to tackle poverty in Scotland. Considering the significant impact coronavirus has had, and will continue to have, on poverty and inequalities, it is important that the replacement fund gets it right in order to help the country recover.

It is worth noting that Scotland is currently suspended from accessing further EU funding due to problems related to its governance and administration. The replacement fund therefore offers an opportunity for reform. Whatever arrangements are put in place for successor funding, the systems and processes must be co-designed and take account of everyone using the system. It is possible to maintain high standards of governance without disproportionate, constantly changing, bureaucracy. Because all this does, is delay access to the fund for those that need it the most. However, we at SCVO are working with our members and the Scottish Government in order to find solutions to the current challenges and ensure that any successor fund does not suffer from the same problems. An accessible fund will ensure that projects crucial in tackling poverty are provided with the resources they need to help those in poverty and their local communities.

Jamie Flaherty is public affairs officer for the Scottish Council for Voluntary Organisations (SCVO)