NICOLA Sturgeon has hit out at the UK Government’s flagship Levelling Up fund, telling MSPs that Scotland was “losing out.”

Awards from round two of the fund from Michael Gove's department were unveiled last week, with ten successful bids in Scotland.

They included £27 million for a ferry for the Fair Isle, £20m to refurbish the Palace Theatre and Grand Hall in Kilmarnock, £14m towards redeveloping a car park in Dundee, and £9m to support the demolition and regeneration of two shopping centres and a vacant office block in Cumbernauld.

However, neither Glasgow nor Edinburgh were successful. 

That was seemingly down to a last-minute rule change which saw ministers judge bids not solely on their merits, but on whether they had been successful in the first round of bidding. 

Effectively, that meant anywhere that received an award last year would be unsuccessful this year.

READ MORE: Scottish councils 'wasted money, time and effort' bidding for Levelling Up funds

Bidders were not told about this in advance, resulting in councils running up huge bills to prepare detailed and ultimately pointless proposals.

The average cost for a bid is around £30,000 according to England's Local Government Association. 

It is understood Glasgow City Council spent up to £500,000 on their seven unsuccessful bids. 

The funding was raised during Thursday’s First Minister's Questions in the Scottish Parliament.

READ MORE: OPINION: Rishi Sunak's version of Levelling Up is 'utter sham'

Ms Sturgeon told MSPs the fund had overlooked, "Scotland's distinct economic needs," and that the latest round of awards "show that many remote rural and sparsely populated regions are being ignored."

She said: “I'm further disappointed that UK ministers decided after bids had been submitted to consider which local authorities have received funding in the first round meaning councils in Scotland wasted money, time and effort bidding for funds that they were no longer eligible for.

“The evidence, I think is clear, this so-called levelling up approach means Scotland is losing out.”

The SNP’s John Mason told parliament that councils had possibly been “misled as to the bidding process by the UK Government.” 

He said the Leveling Up fund needed to target poorer areas. “Surely it has to be either levelling up or geographical spread? It cannot be both.”

The First Minister agreed. “Of course, if the Scottish Government had been given control of this funding, which would have been the correct and sensible course of action, then we would not have taken the competitive dash for cash approach favoured by the UK Government. 

"The UK can of course still choose to devolve funding to Scotland for our share of the remaining Levelling Up funding and we would be happy to discuss this with them. 

"And of course, this is not just our view, the Tory mayor of the West Midlands, described this as another example of Whitehall's 'bidding and begging bowl culture' and he said he cannot understand why the level of not funding money was not devolved for local decision makers to decide on what's best for their areas. 

"I completely agree with that."

READ MORE: UK Government Levelling Up fund to pay for new lifeline Scottish ferry

Last week, following complaints from Glasgow Council leader, Susan Aitken, a UK Government spokesperson told The Herald: “The Levelling Up fund is investing in infrastructure that improves everyday life across the UK, spreading opportunity to historically overlooked areas. 

“All projects were subject to a rigorous assessment process under robust, fair and transparent rules, with no involvement of local MPs in the selection process.”