How Brexit robbed Scotland of crucial funding

Since the Brexit transition period came to an end, we have outlined some of the various adverse implications and negative effects on trade, business and research, for example. However, another benefit of EU membership that came to an end for the UK in December 2020 was the country’s access to the EU Structural Funds.

Structural Funds are pots of funding that intend to support economic development and diminish the inequalities between various areas of Europe. The UK benefitted hugely from this funding. Indeed, across the 2014-20 funding period, the European Structural and Investment (ESI) funds provided €17.2 billion to the UK. Meanwhile, during the same period, the UK received a further €22.5 billion through the European Agricultural Guarantee Fund.

The ESI in particular is used to reduce inequalities between the various regions of Europe, funding less developed areas to a greater extent and helping such regions to catch up. The majority of this funding comes from the European Regional Development Fund (ERDF) and the European Social Fund (ESF), which allocated €5.8 billion and €4.9 billion respectively between 2014 and 2020.

ERDF and ESF funding by nation and region of the UK (2014-2020)

Euro to GBP pound exchange rate as of 21^st April 2021

The loss of these funds is quite clearly going to have a detrimental effect on many already disadvantaged areas, as well as the more privileged regions. An attempt to cover these losses has been made in the form of the Stronger Towns Fund, launched in 2019. However, this fund has been described as a “Brexit bribe” and one that fails to even come close to covering this shortfall.

It is clear that Scotland will face huge losses as a result of Brexit

So, we want to offer a comparison to see exactly how much Brexit is costing these regions of the UK, in relation to this funding. Firstly, however, it must be noted that money from the Stronger Towns Fund has not been directly allocated to Scotland, Wales or Northern Ireland. Instead, it has been proposed that £600m will be made available for these regions to bid upon over a seven-year period. Considering Scotland alone received €941 million (approximately £811 million) across a six-year period from the ERDF and ESF funding, it is clear that Scotland will face huge losses as a result of Brexit.

Stronger Towns Fund (2019-2026)

In comparing these tables, it can be seen that across all regions of England the funding per head of population per year is significantly less than when the UK was an EU member state and received EU funding. This demonstrates another key shortfall that has resulted from the UK leaving the EU.

UK Shared Prosperity Fun

 It must also be noted that the UK government has announced that it will replace the EU Structural Funds with the UK Shared Prosperity Fund, launching in 2022. The government has suggested that the fund will reach around £1.5 billion a year, roughly matching the combined total of the ERDF and ESF funds. However there is a question mark over whether this sum will be reached initially. Indeed, the pilot scheme that has been set up to trial this fund is investing just £220 million in its first year. This is a dramatic difference compared to the sum the UK would have received had it still been an EU member.

 Conclusions

It is clear that leaving the EU has had severe consequences for Scotland and the UK as a whole. The Stronger Towns Fund was an inadequate attempt to compensate for the huge losses in funding that have resulted from the UK leaving the EU and therefore no longer qualifying for the ERDF and ESF funds.

In particular, Scotland, Wales and Northern Ireland were not specifically allocated money from the Stronger Towns Fund, leaving £600 million to be bid upon over a seven-year period - a drastically different scenario from being an EU member. It is clear that an independent Scotland, as a member of the EU, would prosper and benefit from such EU funding.