European Structural Funds
The next item of business is a statement by the Cabinet Secretary for Infrastructure and Capital Investment on the future of European structural funds from 2014. The cabinet secretary will take questions at the end of his statement, so there should be no interventions.
14:34
European structural funds have for many years played a profound role in facilitating structural economic reform in our regions, supporting restructuring and development in key sectors and supporting opportunities and individuals in disadvantaged and vulnerable communities. As the minister responsible for structural funds, I am delighted at the positive impact that the substantial European funds have made and continue to make through the current programmes.
I see the value that structural funds provide in my own constituency, for example in the routes into work project, which is part of North Lanarkshire’s working employability service. The project, which is funded by £1.1 million of structural funds, provides key workers who travel across North Lanarkshire with access to a wide range of education, training and employment opportunities.
I was pleased that the importance of structural funds was recognised in the chamber recently with the debate that was initiated by the European and External Relations Committee, which does such fine work.
Structural funds have been pivotal in supporting economic recovery following the global downturn; in supporting our ambitions for renewable energy; in providing training opportunities for young people; in providing access to finance for our hard-pressed businesses; and in supporting research and development. We have allocated over £650 million since 2007, supporting more than 14,000 businesses, creating nearly 20,000 jobs and providing advice and support to more than 240,000 individuals to enter employment or to progress in the workplace. We responded to the economic downturn by front-loading expenditure and taking a strategic approach to delivering projects that provide real added value.
Given the Government’s commitment to youth employment, I am also keen to respond to the call that was made by President Barroso in response to the rising levels of youth unemployment across Europe. That plea was for us all to do more to support youth employment. In January, he called for member states to develop youth jobs plans; increase the number of apprenticeships and traineeships; guarantee a job or training within four months of leaving school; and redirect structural funds to give priority to youth unemployment. Scotland is already responding. With the Minister for Youth Employment, a draft youth employment strategy and our opportunities for all guarantee, we are ahead of the curve.
We have made it clear that we will take an all-Government, all-Scotland approach to youth employment. That is why I will ask the structural funds programme committee in the lowlands and uplands area to prioritise youth employment with the structural funds that remain unallocated in the period up to 2014. That could provide up to £25 million support for a range of initiatives from training to business development and recruitment incentives which, along with match funding, would guarantee total investment of at least £50 million.
We will work together with the public, private and third sectors. We want to break the cycle that too many of our young people find themselves unable to escape from. We all hear of young people who are unable to get a job because they have not had the experience of work, but who cannot get the experience of work because they do not have a job. We want to break that cycle. By incentivising recruitment and getting young people into real jobs, we can start to break it. Of course, the global financial downturn means that these are tough times for everyone, including our small and medium-sized enterprises. We understand that, as our support for SMEs demonstrates. We want to ensure that we can further support our SMEs to give chances to our young people, who will in turn be the people who build the SMEs of the future.
We want our public sector partners and the business community to work with us on supporting young people into real jobs. That is why I want the focus of the funds to be incentivising the recruitment of young people into jobs. That will build on the £30 million that the Scottish Government has already committed to youth employment.
That brings me neatly on to the future programmes for structural funds that will run from 2014 to 2020. Many of you will be aware that the European Commission published its legislative package in October 2011. The Commission proposes an innovative approach to encourage co-operative and partnership working at all levels. Given the team Scotland approach that we take in this Government, we very much welcome the Commission’s approach at all levels.
At a strategic level, the Commission wants to see closer integration between structural funds, rural development funds and fisheries funds. It aims to achieve that through common regulations and programme arrangements and a common strategic framework that will apply to all the funds and ensure that funds are concentrated around key themes. The common regulations will support alignment and integration of those funds by focusing resources on 11 common thematic objectives that are linked to the objectives of the Europe 2020 strategy. That should help to simplify the planning and implementation arrangements, focus the funds on results and reduce the administrative burden for all those who are involved in European funding.
The 11 thematic objectives and the Europe 2020 strategy objectives fit well with the Scottish Government’s priorities as set out in our economic strategy, which are focusing on providing a supportive business environment; improving access to finance; supporting innovation and R and D; transitioning Scotland to a low-carbon economy; and ensuring that individuals have the skills and knowledge to compete in the labour market. Those ambitions—our ambitions for Scotland—are all reflected in the Commission’s thematic objectives.
In the new programmes, co-operation at a strategic level will be articulated through the partnership agreement. That will be produced at a Scottish level and will feed into the overall United Kingdom-wide partnership agreement. The Scottish agreement will be built from the bottom up with our stakeholders and will set out how the funds will, separately and together, maximise their impact on Scotland by prioritising the objectives that matter most to us.
We will work at local and regional levels to develop our plans for supporting local and regional development. The common arrangements identify a number of ways of supporting that approach. We have significant experience of such an approach, given our work with community planning partnerships and the strategic and effective role that they have played in delivering structural funds under the current arrangements. The approach also builds on the excellent work that has been done through LEADER and fisheries local action groups, which bring together local stakeholders from the public, private and third sectors to develop and deliver local solutions to local issues.
With reducing budgets, we can and must make the best use of all available resources. By looking across the funds and working together, we can achieve synergies. As with all things, we can achieve more collectively than we can individually. That is why, in working with Richard Lochhead, the Cabinet Secretary for Rural Affairs and the Environment, we established a programme board to move forward the work on integration. The initial phase of that work has been completed and we are now committed to moving forward on developing the Scottish partnership agreement with our stakeholders over the coming months.
We will work with partners to identify the opportunities for exploiting the integration of funds. For example, in supporting renewable energy, there is scope for us to fund large strategic projects through the European regional development fund, which could be complemented by smaller local developments that are funded through the rural development fund. There is the opportunity to provide joint support for research and development on renewable energy sources from the ERDF and the European agricultural fund for rural development. To support the competitiveness of SMEs and the agriculture and fisheries sectors, a key area for collaboration and integration across the funds must surely be our food and drink sector.
We intend to work closely with partners over the coming months to develop and shape our future programmes. We will do that openly and collaboratively through informal consultation, for example through our future of the funds blog, and in more formal ways. I look forward to working constructively with all colleagues in the Parliament and MSPs from all corners on moving the process forward for Scotland’s benefit.
The cabinet secretary will now take questions on the issues that his statement raised. I intend to allow about 20 minutes for questions.
I thank the cabinet secretary for his statement. I join him in recognising the important role that European structural funds play and I welcome the focus of future plans on tackling youth unemployment. I am sure that he will look forward to working on the project in his constituency with the Labour administration that was returned in North Lanarkshire Council last week. However, the focus of the funds on youth unemployment raises further questions about the Scottish Government’s decision to cut college budgets.
I broadly welcome the statement and the commitment to future consultation on how the next tranche of funds will be invested. However, is the cabinet secretary aware of concerns that the plans should be more advanced than they currently are and that not all potential stakeholders, such as those in the life sciences sector, have been properly consulted yet?
I looked at the future of the funds blog and found only three posts and eight comments, so will the cabinet secretary ensure that all relevant stakeholders are fully involved in the development of the partnership agreement? In doing so, will he also ensure that, as the Scottish Council for Voluntary Organisations has called for, there are opportunities for the third sector to be involved in programmes, given that sector’s proven track record in delivering programmes in areas such as tackling youth unemployment?
Finally, when will there be further details on how the £25 million of currently unallocated funds will be invested, given the time limitations on spending that money and the current need for investment? Is it not important to make that decision as soon as possible? What lessons have been learned from the previous round of funding to ensure that we have maximum uptake and maximum impact from this coming round of funding?
I thank the member for welcoming the statement and I will try to answer his questions.
First, this money will be focused on trying to get young people into jobs. As the member knows, we are spending a great deal of money on apprenticeships and training, and on employability. What we want to do with this money is to focus on getting young people into employment, which I am sure the member welcomes.
I accept that we still have a number of sectors to consult. However, this is an on-going process to try to influence decisions, particularly those taken in Brussels. As the member knows, the budget and the funds for the period beyond 2014 will not be the subject of a final decision for some considerable time. We want to ensure that we have a team Scotland approach, including in the chamber. Ideally, we want to speak with one voice, which would be more effective in Europe in ensuring that we get access to the funds that we need.
I entirely agree with the member on the third sector’s efficiency and effectiveness in delivering programmes. That has been proved many times over, not just in relation to the delivery of European-funded programmes but through a range of different services that are provided throughout Scotland. I am keen to ensure that the third sector plays its full part in the delivery of our youth employment funding, as well as in the wider programmes that we are discussing.
I thank the cabinet secretary for advance sight of the statement. I welcome the statement and, in particular, the emphasis that was placed on youth employment. In looking at unemployment figures over recent months, I have found it notable that the problem of youth employment in Scotland is large and growing relative to the rest of the United Kingdom. It is therefore vital that we act on the issue.
I will ask the minister questions on two key areas. First, although I welcome the minister’s emphasis on the support for SMEs, there are competing requirements in the funding objectives of the schemes. Does that demonstrate that the minister accepts that the development of the wealth-creating sectors in the Scottish economy has priority?
Secondly, and perhaps more controversially, is the issue of how we tackle youth unemployment. Much is already being done to encourage training in Scotland, but one key area that is falling short is workforce mobility. There are areas in the economy where there is a labour shortage, but it is increasingly difficult to match up jobseekers with the jobs that are being created in the key areas. Given that a key thematic objective of the 2014 to 2020 programme will be to promote employment and support labour mobility, what will the minister do to match Scotland’s jobseekers with the jobs that are being created in Scotland?
I thank the member for his positive statements and positive approach. First, with this money, we can simultaneously help young, unemployed people to get into employment and help our SMEs. I expect that the recruitment will be heavily focused in the SME sector, particularly in some of the growth sectors in Scotland. One example is the information technology sector, particularly the software sector, in which many companies have been growing by 10, 20 and, in some cases, 30 per cent a year even when the rest of the economy is pretty flat. Matching young people with the opportunities in the IT sector with this money is one example of how we can match up the needs of the SMEs with young, unemployed people.
Secondly, the tremendous work that is being done by the Minister for Youth Employment is very much focused on trying to get young people to exploit the opportunities, particularly where there are shortages of skills or people in any part of the economy. The member made a point about matching the opportunities for skilling, reskilling and jobs in areas where there is a shortage of people with the right skills with people who are unemployed or who need to go up the skills ladder. That is absolutely at the core of the work that the minister is doing.
I thank the cabinet secretary for his statement. Given that the European Commission has made clear that strengthening synergies and complementarities between the structural funds and the European Union’s research and innovation programme, horizon 2020, will be essential for the funding period 2014 to 2020, what progress is the Scottish Government making on developing a Scottish approach to the smart specialisation agenda?
Good progress is being made on the development of the Scottish smart specialisation strategy. We believe that it will provide opportunities for us to share with others Scotland’s particular strengths and expertise while enabling us to learn from other successful regions in Europe. For those who are unfamiliar with the programme, I explain that the purpose of smart specialisation is to encourage EU regions to develop a strategic approach that is based on their unique competitive advantages. Scotland has already been pursuing a smart specialisation approach through our focus on supporting and developing key sectors, thus placing us in a strong position to participate in the smart specialisation agenda.
A Scottish smart specialisation approach paper was submitted to the European Commission for review on 26 January and we will receive initial feedback from the Commission on our proposals later today. Over the summer, we will work to refine and develop our strategy with a view to officially joining the smart specialisation platform later this year.
The cabinet secretary referred to the excellent work that is being done through the LEADER programme. I hear what he is saying about synergies and integration, but can he reassure rural communities that that will not be to the disadvantage of community-led programmes and that at least a similar level of support will be available in the next tranche of structural funding as is available in the current tranche to address local development in rural areas?
I very much agree with the member about the need for local and locally driven initiatives. Our experience, not just of European funding programmes but across many areas of Government, is that community-led initiatives are far more successful and long lasting than those that are handed down from central Government. I give the member an absolute guarantee that a major focus of all our efforts on European funds and beyond will be to help community-led regeneration. The LEADER project, in its various guises, is a good example of how community-led regeneration in rural areas can be very effective—I am totally at one with the member on that. That is a key part of our strategic approach.
As there are a number of members who want to speak, more succinct questions and answers would be helpful.
It is clear from the cabinet secretary’s statement that, although we can expect many changes to the operation of structural funds post-2014, there will be opportunities for Scotland. It is important to bear that in mind.
On the importance of existing structural funding to renewable energy and the low-carbon economy, in the context of projects such as the Cardenden heat and power project in Mid Scotland and Fife, will the cabinet secretary confirm that, in relation to future European structural funds, the renewables and low-carbon economy sector will play a pivotal role, to ensure that European funding is made to work for Scotland?
I can confirm that. The ERDF, in particular, has a clear focus on helping to fund the transition to a low-carbon economy. Indeed, 30 per cent of funding has been allocated in that way, amounting to about £90 million. The Cardenden heat and power project, to which Annabelle Ewing referred, is exactly the kind of project that we want to encourage throughout Scotland.
Does the cabinet secretary support the bid from the Highlands and Islands to gain structural funds under the new programme as a transition region? Does he share my view that access to a new generation of structural funds is vital for the Highlands and Islands economy and can help us to reach Europe 2020 targets for jobs, growth and a low-carbon environment?
I entirely agree with the member. It is extremely important that the Highlands and Islands is regarded as a transition region, which will allow it to access the necessary funds to help to reinforce and expand the economy in the area. Although many parts of the Highlands and Islands—not least in and around Inverness—are doing particularly well, in many areas, such as parts of the Western Isles, there are still relatively high levels of unemployment and deprivation. We will need to continue to fund and invest in the Highlands and Islands between 2014 and 2020, to ensure that we bring the whole region up to a similar standard to that enjoyed by the rest of Scotland.
The cabinet secretary talked about the positive impact of structural funds in Scotland. What lessons have been learned from the current application of funds that can be applied to future programmes?
There are a number of lessons to be learned, one of which is the need for better co-ordination and integration in relation to the use of the funds. Let me put things in perspective: we expect a budget of around £600 million in structural funds between 2014 and 2020; the European rural development fund is of a similar size, and there is much complementarity between the two funds.
That is why we are keen to move to a more integrated approach. If we had our way, we would move faster to a much more integrated approach than the Commission is proposing. Nevertheless, we are taking the right direction of travel, because the ability to look at the funds in a more rounded way and to have a more integrated and co-ordinated approach will help us to get a bigger bang for the buck as we use the moneys.
The cabinet secretary made much in his statement of ambitions on youth employment and integrating programmes to help in that regard, but the Government has yet to engage in the UK Government’s £1 billion youth contract, which could help 16,000 youths on a work programme in Scotland to get a job, which the UK Government would subsidise. Will the cabinet secretary engage in and promote the youth contract as part of the integration of programmes, for the benefit of the people of Scotland?
The Government works with the Department for Work and Pensions day in, day out on a range of programmes, including the youth contract. We will use any programme and any fund that will help to generate youth employment and reduce youth unemployment in Scotland, which is a key priority for the Government. We do not care if we have to sup with the devil to achieve that objective; the important thing is that we get young people into work.
I understand that the UK Government and some other member states do not support transition region funding. What is the Scottish Government’s position on that? In relation to the creation of more jobs for young people, for example through the Nigg Skills Academy in my constituency, will the Government persuade people that such an approach, rather than switching the tap off at this stage, will generate steady improvement?
The Scottish Government’s position is very clear. We support both the concept and the practice of transition regions and, for a number of reasons, we are anxious to ensure that the Highlands and Islands continues as a transition region in the 2014 to 2020 programme. Rob Gibson referred to the opportunities for young people in the Highlands and Islands. In the past, one of the problems there has been depopulation, particularly as a result of young people leaving to get job opportunities outwith the area. Depopulation feeds unemployment, deprivation and poverty, and eventually erodes communities. It is therefore extremely important not just for youth employment but for the long-term economic sustainability of many communities in the Highlands and Islands that we get additional funding to ensure that the income per head and levels of employment in every corner of the Highlands and Islands are not just brought up on average but brought up to the Scottish average and thereafter to the European average.
Does the cabinet secretary believe that the sustainability of the future investment of structural funds is important and that the use of the structural funds should demonstrate clear added value to the possible use of other funding in the kind of work that the cabinet secretary has outlined? Does there need to be a legacy effect from the use of those funds? What might such effects be?
Additionality is a key aspect of European funding. It is important that we continue to ensure that we get maximum added value from our European funding, which is why match funding rules and the like are in place. They are to ensure that we get a joined-up approach as often as possible.
In relation to sustainability, a very good example is the SPRUCE, or Scottish partnership for regeneration in urban centres, fund, which is a JESSICA, or joint European support for sustainable investment in city areas, fund. A total of £50 million is available for investment, albeit that it is loan funding, in regeneration projects in Glasgow and elsewhere. There are 13 qualifying authorities for the SPRUCE project. I think that it will make a major contribution to the regeneration of many parts of our urban areas in the years to come and that it will help to maintain not just the sustainability of the funds but, more important, the sustainability of urban communities.
I welcome the announcement of up to £25 million for youth employment from unallocated funds, but does the minister know yet how future funding is to be allocated across the programmes and across the UK?
Unfortunately, it is too early to say that. We do not know the answer to that question, and it is likely to be months, if not even longer, before we do. However, in our wide-ranging engagement with our stakeholders, including the new Convention of Scottish Local Authorities, we want to ensure that the funds that are eventually allocated to and confirmed for Scotland are used most effectively, particularly in tackling major problems, such as youth employment. We also want to ensure that both urban and rural communities benefit from those funds and that they are targeted in the areas of highest priority need.