THE UK Government has confirmed Scotland is to receive more than £200m over the next three years in replacement EU funding after Brexit.

The UK Shared Prosperity Fund (UKSPF) will see £2.6bn split between the four nations of the UK over the next three years, rising to £1.5bn a year by 2025.

The UKSPF is supposed to replace two main funds from the European Union prior to Brexit – the European Social Fund and European Regional Development Fund.

However the Scottish Government claims the funding falls short by at least £130m this year and it will only receive £32m. 

Ivan McKee, the Scottish Government Business minister, said the UKSPF showed “exactly why Levelling Up means losing out as Scotland will receive considerably less funding than before Brexit.”

He said: “EU funding has supported infrastructure projects and community initiatives across the country since the 1970s, with Scotland receiving and delivering over £6 billion of EU Structural Funds.

“Transformational projects, such as the University of the Highlands and Islands and the European Marine Energy Centre in Orkney, have brought significant benefits to businesses and communities.

"It is hugely disappointing that future projects with as much potential may lose out.”

Mr McKee stressed that since 2016 Holyrood ministers had “tried to engage constructively with the UK Government to ensure this Fund was delivered in a meaningful way” but accused Westminster of “undermining devolution by failing to give the Scottish Government a decision-making role - which ultimately fails to meet the needs of Scotland’s communities.”

A report by Commons Treasury Committee published in January also outlined concerns about the UKSPF, saying that despite it being a “centrepiece” of the government’s levelling up ambitions, it was only 60% of the EU funding value, adding: “The Government will need to demonstrate how these reduced funds will achieve their defined metrics for levelling up.”

The Department for Levelling Up, Housing and communities said the amount allocated for the first two years of the UKSPF is lower than the EUs funding as the EU funding is still being spent, and will come to an end at the end of 2023, at which point the UKSPF will be ‘ramped up’.

However it is unclear how much it will be increased by, and whether it will in fact be a direct match to the EU funding amount immediately.

The department said that by 2024/25, the £1.5bn UKSPF will match what was previously spent in Scotland.

Levelling Up Secretary Michael Gove said: “We have taken back control of our money from the EU and we are empowering those who know their communities in Scotland best to deliver on their priorities.

“The UK Shared Prosperity Fund will help to unleash the creativity and talent of Scottish communities that have for too long been overlooked and undervalued.

“By targeting this funding at areas of the country that need it the most, we will help spread opportunity and level up in every part of the United Kingdom, including Scotland.”

Scottish Secretary Alister Jack added: “This £212 million investment is part of a comprehensive package of UK Government support to level up Scottish communities, and comes on top of a record block grant for Scotland.

“We will continue to work closely with local partners to ensure this money will go where it is most needed so people can be proud of where they live and work through delivery of new infrastructure, support for local business and by developing skills."

Economists at the Institute for Fiscal Studies were critical of the government’s mechanism for replacing the EU funding, saying the original schemes were badly designed and the UKSPF was no better.

David Philips, associate director at the IFS said: “This is a missed opportunity to reap a dividend from Brexit and improve policy. Instead the government has simply replicated an inequitable and poorly designed EU funding regime.”

In response to the Scottish Government's claims, a UK government spokesperson said:"Our Shared Prosperity Fund will match EU funding, remove unnecessary bureaucracy and help unleash the full potential of people in Scotland and across the UK.

“The UK Government is putting local people in Scotland front and centre in how UK money is spent, enabling communities to invest in the priorities that matter to them.

"We will continue to work with the Scottish Government and councils to make sure funding goes where it is needed most, delivering new infrastructure, supporting local business and creating better jobs."