Leaving the EU: European Social Funding in Scotland and the UK

Carol Monaghan Excerpts

Tuesday 10th January 2017 Westminster Hall

[Natalie McGarry]

The hon. Member makes a very important point. The post-Brexit discourse has focused on higher education and other sectors, but not much on further education and the invaluable work that is done in local communities—at the very coalface, in the sense that people in colleges and community groups go into the very hearts of communities, where people are hardest to reach. That work is invaluable, and the hon. Member’s point is well made.

The projects that I mentioned are only a few of the many supported through European funding that make a tangible and real difference to the lives of people in Scotland and across the rest of the UK. This year alone, Glasgow Kelvin College, a further education institution that serves my constituents and has a campus in the Easterhouse area of my constituency, secured £1.5 million-worth of European social funds, on top of £1.9 million last year, which enabled it to continue its fantastic work on employability and vocational skills across Glasgow. That European social funding directly supports real jobs—more than 10 of them—and helps to create opportunities for many more.

In the past few months, I have met the principals of colleges in Glasgow with groups and organisations whose work relies on European social funding. They are worried about the future. They should currently be considering future bids for funding, but little or no information has been forthcoming about where they stand. The Government can provide certainty to Nissan and talk about guaranteeing research and technology funding to appease the higher education sector, but European social funding is the Kevin McAllister of the Brexit rush—drowned out by louder voices, trampled on in the rush to get out the door and left home alone.

The elephant in the room is, of course, the fact that the UK is leaving the EU, and that no non-EU country has ever received European social funding. Brexit is not the circumstance of Scotland’s or Glasgow’s choosing. Organisations across our city and throughout our country stand to lose hundreds of millions of pounds. Our people the length and breadth of Scotland and the UK stand to lose invaluable services and support, which will be to the detriment of their lives and our economy.

My constituency—indeed, our entire city and our country—voted to remain, yet our further education and communities face Brexit’s damaging consequences unless the Government stand up now and guarantee that they will protect the funding for projects at an equitable and comparable level. The true and full impact that the projects financed by the European Social Fund have may not be fully realised during one round of funding, but it will be undoubtedly real and lasting. That cannot be said of the impact that taking it away will have—it will be immediate and painful. EU funding has been an integral feature of Scotland’s educational, employment and economic landscape for so long that the removal of those key resources cannot be easily done—at least, not without substantial damage.

[Carol Monaghan (Glasgow North West) (SNP)]

Does my hon. Friend agree that much of that damage will be done to the deprived communities in cities such as Glasgow, which use such funding to engage young people in education, employment and training?

[Natalie McGarry]

The hon. Member has pre-empted almost my next sentence.

Worse still, because structural funds are targeted at poorer regions and areas of higher socioeconomic disadvantage, the impact will be disproportionate if such gargantuan funding gaps cannot be filled. Of course, the UK Government have announced that they will underwrite all EU structural and investment fund projects signed before the autumn statement last year, and that they will assess whether to underwrite funding for certain other projects that are signed after the autumn statement but before the UK leaves the EU. The Chancellor of the Exchequer said that the UK Government were

“determined to ensure that people have stability and certainty in the period leading up to our departure from the EU”.

That statement, however, is at odds with the Government’s position, and their rhetoric is far from reconciling with the reality facing organisations in Glasgow, across Scotland and, indeed, throughout the UK. The Government’s position falls far short of what is needed. It is a limited guarantee for a narrow number of schemes for a restricted number of years, and it will leave Glasgow and Scotland hundreds of millions of pounds worse off than if we were still members of the EU. Organisations throughout Scotland that provide invaluable services do not have the certainty or security that the Chancellor has promised them.

In December, at Education questions in the House, I expressed those specific concerns. After I asked my question, the hon. Member for Luton North (Kelvin Hopkins), who had campaigned to leave, asked:

“Given that all EU spending in Britain is simply returning part of our gross contribution to the EU budget, would it not be sensible for the Government simply to commit now to replacing EU funding with UK Exchequer funding, thereby keeping everyone happy?”

The Minister for Schools replied that the

“the United Kingdom Government will decide how best to spend the money that was previously going to the European Union.”—[Official Report, 19 December 2016; Vol. 618, c. 1164.]

That was certainly more substantive than “Brexit means Brexit”, but no more enlightening.

With an eye to the future, what assessment have the Government made of the impact of losing EU structural funding on economic growth, output, productivity and employment in Scotland and throughout the UK? Does the UK intend to adopt a similar social and regional development programme to that of the European social fund and the European regional development fund? If so, would the UK Government match the existing allocated structural fund budget in absolute terms? Would any new programme have the same priority areas of focus as EU structural funds? The EU structural funding programmes allow for long-term planning over a seven-year period. Would the UK Government commit to a similar seven-year funding structure, or would it be different?

In the here and now, will the Government confirm that European social funding will not be frozen during the negotiations for the UK to leave the EU? Will the Government confirm what discussions they have had with the EU to ensure that structural funding that has been allocated to Scotland for 2014 to 2020 will not be clawed back? Finally, will the Government commit to undertake an evaluation of the European regional aid lost to Scotland during 1975 to 1995 because of the Government’s deployment of a subtractionality funding model?

The UK Government can, should and must do more. Ignorance, or indeed arrogance, will simply not suffice. It would be unforgivable for Scotland to be punished for a situation not of its own making; to suffer for an ill-judged Westminster gamble to appease Eurosceptic Back Benchers. Now is not the time for uncertainty for the further education sector or invaluable community projects. The Government can end that uncertainty now.

Guaranteeing existing levels of support and match funding is not subject to treaty negotiations with EU partners; we are talking about the here and now, and about what the Government choose to prioritise. The Government cannot hide behind empty slogans because this is about the Exchequer and the Government’s spending priorities. The Prime Minister stood on the steps of Downing Street and said that she wanted a Government who would work for all. Prove it. She should not disregard Scotland and not ignore our interests, and she should show us her plan and that she is serious about protecting Scotland.

[The Economic Secretary to the Treasury (Simon Kirby)]

It is a great pleasure again to serve under your chairmanship, Mr Nuttall. I congratulate the hon. Member for Glasgow East (Natalie McGarry) on securing the debate and on her thoughtful contribution. I also thank the hon. Members for Argyll and Bute (Brendan O'Hara), for East Renfrewshire (Kirsten Oswald) and for Glasgow North West (Carol Monaghan) for their additions to the debate, which has been useful and interesting.

The European social fund was set up with the objective of creating a more cohesive society, as well as a more prosperous economy throughout the EU. Projects throughout the UK, including in Scotland, have received funding from the fund. Under the ESF programmes for 2014 to 2020, a total of €466 million was allocated to Scotland. Funding for some 123 projects has already been agreed. The previous ESF programme in Scotland saw more than 430 projects funded and completed, and more than 390,000 people supported. In England, 86% of participants said that they had, for example, developed skills required in work.

Leaving the EU means that we will want to take our own decisions about how to spend our own money, which will continue to deliver the policy objectives previously targeted by EU funding. That is the context in which we have gathered for this debate. I would like to start by saying that I recognise the concerns of the hon. Member for Glasgow East and others who have spoken so passionately in the debate. She asked for certainty. I agree that it is essential that we provide certainty for recipients of ESF funding. That is why in October my right hon. Friend the Chancellor of the Exchequer announced certain guarantees.

All European structural and investment funds projects signed before last year’s autumn statement will be guaranteed, including those funded by the ESF. That also includes those projects that will continue beyond the UK’s departure from the EU. Moreover, funding for projects signed after the autumn statement, but before we leave the EU, will also be guaranteed—that is, providing that the responsible Department is content that the projects provide strong value for money and are in line with domestic strategic priorities, which are both reasonable points.

[Carol Monaghan]

All those assurances were very welcome when they were made, but the problem remains that we have an issue beyond that. We need to look to the future. We need a guarantee of funding—a pot of funding that will still be available for further and higher education way into the next decade.

[Simon Kirby]

I recognise the hon. Lady’s point, which I will cover. It is important that we have a long-term objective, that we spend money wisely and that we get the best possible solution.

The Government will ensure that the devolved Administrations are funded to meet the commitments they have made under current EU budget allocations. Given that the administration of EU funding is devolved, it will be for the devolved Administrations to decide the criteria used to assess projects.

I would like to respond to some of the specific points made. I want to reassure the hon. Member for Glasgow East about the guarantees, to which I referred, announced by my right hon. Friend the Chancellor—specifically, to ensure that recipients of funding throughout the UK, including Scotland, will have payments guaranteed. After Brexit, they will continue to be guaranteed. They will not be frozen or clawed back during the negotiations. That is an important point. The Government have committed to consulting stakeholders to review all EU funding schemes in the round. In the meantime, the Chancellor has made two guarantees, which I have mentioned. The hon. Lady’s questions are the very types of question that we hope and anticipate stakeholders will raise in the consultation, and the Government will listen carefully to everyone’s contributions.

It is also worth putting it on record that the UK Government’s decision to focus on investment, which was announced in the recent autumn statement, will result in the Scottish Government’s capital budget being increased by some £800 million by 2021—money that can be used to boost productivity and promote growth in Scotland. Significantly, the Scotland Act 2016 also enables the Scottish Government to raise more than half of its own funding.

In conclusion, as we are all very aware, the UK will leave the EU. The Government are determined to make a success of that for all of the UK, including Scotland. We have been clear about the contribution of funding secured through the ESF, but leaving the EU means that we will want to take our own decisions about how to spend UK money. Brexit will allow us to do that. The Government will work closely with the Scottish Government to get the best possible deal for all parts of our United Kingdom. We will give the Scottish Government every opportunity to have their say as we form our negotiating strategy, and the Government will continue in the coming months to consult stakeholders to review all EU funding schemes in the round. We are very much in listening mode.

Our aim will be to ensure that any ongoing funding commitments best serve the UK’s national interest while ensuring appropriate certainty. The Scottish Government and other devolved Administrations will be fully involved. In the meantime, it remains important that recipients of ESF funding continue to implement good value projects. The coming years will present a number of opportunities, which we must grasp and maximise. I am encouraged by the commitment of those who have spoken in support of vital schemes in their constituencies, and we will continue to work closely with all partners to ensure that every part of the UK prospers.

Question put and agreed to.