Replacement of European Structural Funds post EU-Exit

View a PDF version of SCVO’s full consultation response

Our position

SCVO and our members believe that the replacement fund’s priorities should be set at a devolved level, within the Scottish Government. The replacement should look to tackle inequalities, improve human rights and promote wellbeing by linking it with Scotland’s National Performance Framework and other relevant policy frameworks. It should seek to utilise non-economic evaluation metrics by measuring wellbeing outcomes in order to effectively measure the full impact of projects.

Furthermore, SCVO believes that the voluntary sector in Scotland must play a key role in the creation of the fund in order to ensure its accessibility and transparency. Through this, the voluntary sector can identify challenges the fund has been subject to in the past and propose solutions so that the replacement fund does not suffer from the same problems.  

Our response

SCVO’s response to this consultation was informed by two meetings, facilitated by SCVO and The Human Rights Consortium Scotland, held in Glasgow and Inverness. These meetings brought together approximately 50 individuals from a range of voluntary sector organisations in Scotland to discuss, in detail, the replacement of European Structural Funds in Scotland. SCVO’s membership were also asked to feed into our consultation response via email, in order to ensure that their thoughts were represented throughout our response.

Addressing spatial inequalities

SCVO members are keen to see the replacement fund consider new measurements for assessing impact such as utilising the Scottish Index of Multiple Deprivation (SIMD) which would allow for the funds to be targeted not at the Scottish regional or local authority areas but at the specific locality areas who are identified using the index as being in most need of assistance.

Within these areas and beyond, the level of services local authorities are expected to provide has increased on an almost annual basis, despite a lack of significant investment in local government. Therefore many local authorities often feel they are deprived of the resources required to fulfil the needs of their citizens due to capacity gaps. As such, many community level and smaller organisations have stepped in to fill these capacity gaps. These community level and smaller organisations, SCVO members believe, should be provided with more accessible funding access routes in order to deliver projects aimed at decreasing inequality in Scotland.

Fund priority setting

SCVO members believe that the priorities for the fund should be set at a devolved level within the Scottish Government. Though further consideration must be given as to how the funds are distributed between regions in Scotland in order to identify appropriate priority areas. The 2000 to 2006 programmes were administered using three areas, East, West and Highland and Islands. The last being a Special Transitional Area and therefore eligible for a higher intervention rate. Whilst retaining the Highlands and Islands Area, it may be appropriate to further subdivide the East and West Areas and include, for example, a Borders/Dumfries and Galloway area, alongside a North East, South East and West area. Once appropriate region areas are identified though which to manage the funds these areas should then determine the priorities from the approved range that they are to apply.

Adding value to existing funds

Many SCVO members who receive European funding have used the LEADER programme for rural community development. There are concerns that were the provision of this funding source to come to an end, it is not clear where support for rural development would come from. The initiative is viewed as one which empowers local communities to consider what they can do to improve the resilience and future of their area. Members believe that this core component of the funding is central to the success of LEADER supporting regional investments as this type of fund gives more consideration to places that are normally missed by other types of financial support. There have been suggestions that the replacement fund will support LEADER in the future, however, there remains a lack of clarity on whether this will be the case.

Alignment with UK Industrial Strategy

Should the UK Government decide to implement a replacement fund around the Industrial Strategy, it would be possible to align Scottish Government policy development and spend alongside the five foundations of the Strategy. The amount of funding currently being directed at City and Regional Deals is probably sufficient for these deals to be stand-alone, with the replacement fund utilised to target other areas where there are vulnerable people in need of assistance.

However, the Industrial Strategy has too narrow a focus on blunt productivity measures. It outlines five measures for a ‘transformed economy’ and outlines a number of commitments around these measures, none of which directly relate to the role of the voluntary sector in tacking inequalities. Therefore, SCVO members do not believe funding provided to Scotland should be allocated on the basis of the priorities of the UK Government’s Strategy.

Evaluating success

SCVO members have expressed the view that they are keen to see the replacement fund move beyond economic indicators and implement a framework which measures wellbeing and aligns with the Scottish Government’s focus on the creation of a wellbeing economy. Economic indicators, whilst a statistically reliable measure, only capture material wellbeing. These indicators do not account for social and environmental costs or reflect social inequalities and regional disparities in full. The replacement fund offers the opportunity to embed wellbeing indicators as a measure of evaluation alongside the more traditional economic measurements.

Additionally, SCVO believe that two types of evaluations should be carried out as to ascertain the overall effectiveness of funded projects. Firstly, an implementation evaluation should be carried out at the early stages of the project, in order to assess how it is initially being managed and executed. Secondly, impact evaluations should take place which take into account all indicators and make an assessment as to what extent the project is delivering against the fund’s priorities.

Funding periods

SCVO members noted that there are positives in seeing the replacement funding retain the same attributes with regards to funding duration. Maintaining the longer-term funding programme period of seven years, which sits across parliamentary timescales, ensures that there are no short-term ‘politicking’ regarding funding decisions between political parties in the run up to elections.

However, this was not an overall consensus, with some members explaining that the project funding amount was the maximum that could be claimed over a seven-year period and that this amount could only be decreased (but not increased) depending on mid-term evaluations. The differing view of some SCVO members is that by shortening the period of funding to four-year rounds that it would allow for the approval of multi-annual applications.

Partnership and governance structure

SCVO members have noted that were local authorities to be tasked with delivering the funding, then it must be ring-fenced to ensure that funding is distributed in a timely and efficient manner. Members stated that the use of local authorities in the management of funds would also help to ensure the right projects are resourced, given that they will have local knowledge off the specific issues which impact their communities.

Additionally, SCVO members have also stated that they would support the replacement fund using a similar governance process to what was in place prior to the 2014-2020 funding round. This model of delivery was carried out through a number of regional boards who managed funds on an independent basis throughout Scotland.

Members stated that the methodology used to deliver the current programme of funding has failed due to each lead partner setting their own application process, sets of outcomes and results which are subject to both Scottish Government rules and the EU’s rules. In the current system, Scottish Government acts as both rule-maker and arbiter, with no separation of duties when it comes to application assessment and the hearing of appeals etc. Currently the process does not have an independent voice or adjudicator. This current governance approach is broken and that is evident by the fact that a European Commission audit found that the system was not fit for purpose, resulting in Scotland’s suspension. The replacement fund must learn from the mistakes of the past and not follow the same process as its current iteration.

Delivery model

The current fund adheres to the principal of ‘additionality,’ which means that EU funding has to be matched by national funding, with match percentage rates dependent on the area’s status. So far, there is a lack of clarity as to whether the replacement fund will follow the same principle or if it will seek to fully fund projects entirely without match funding.

Should the fund look to take a matched funding approach, SCVO members believe that decision-making must take place at the level (national/regional/local) at which the match is added. In the past, the voluntary sector have sought and obtained match funding from a number of sources including Scottish Government, local authorities or philanthropic funders. In the current programme, obtaining match funding has been a significant issue for SCVO members, therefore there needs to be an agreed formula to ensure that there is match funding available, which would enable Scotland’s voluntary sector to make the best use of the replacement fund.

Capacity building

In order to ensure that the local partners and communities are able to fully participate in the replacement funding programme, there needs to be acknowledgement from Scottish Government that the current process doesn’t work. It is cumbersome and exacerbates already limited existing capacity and resource challenges faced by organisations throughout Scotland’s voluntary sector. And it is subject to constant change. To improve participation, the replacement fund needs to be simple and streamlined with minimal duplication of effort. Many smaller organisations have failed to engage with the fund in its current iteration due to its complexity. Evidence highlights that the increasing, and ever-changing, complexity involved in applying for, and reporting on, EU funding programmes has led to a reduction in the amount of funding being accessed by voluntary sector organisations. SCVO and our members are keen to see that the replacement fund does not suffer from this same challenge.

Lessons to be learned

It is unsurprising that the most successful projects, supported by the fund, have been ones driven by the voluntary sector, regional and local authorities, other non-governmental organisations, colleges and universities. According to SCVO members, the success of these projects was down to the delivery being locally based with the Scottish Government only participating as Managing Authority. In the current programme of funding, it is difficult to identify how decisions are made when agreeing spending priorities. A return to regional led delivery would provide the replacement fund with up to date relevant information on the local action that is required to meet national priorities.

However, if the decision is made to continue with lead partners distributing the funds within their sector then SCVO members would like to see significant funds being managed by the sector for the sector. In Wales, the WCVA currently manage over £75 million of European funds on behalf of the voluntary sector. The funds are all committed and on target for spend. Investing in the sector and its priorities is low risk, high value and provides maximum outcomes.

SCVO has also learned of concerns relating to the current fund’s IT system. The European Structural Funds IT System, ‘EUMIS’, was due to be implemented throughout the country in June 2015 and provide functionality for lead partners, delivery agents and the Managing Authority. However, this did not happen, resulting in lead partners devising their own claims processes. In any replacement fund, the development of the IT system needs to be carefully considered to ensure that it is robust, accessible and fit for purpose. Again, this has been done successfully in Wales

SCVO members would also like to see a return to the pre-payment of funding. In previous iterations of the programme, funding equal to 30% was made at approval and thereafter claims paid on a regular basis until 90% of the funding was paid and a final claim was made which released the remaining funds. This approach eases the cash flow position of project delivery organisations and allows for the swift delivery of projects, aimed at supporting vulnerable individuals, by voluntary sector organisations who would not otherwise be able to participate.

Conclusion

The suspension of EU funding to Scotland remains a major concern of SCVO, our members and the wider voluntary sector. The suspension demonstrates the fact that the current system does not work, as illustrated in some examples in this consultation response but there will be many more. Whatever arrangements are put in place for successor funding, the systems and processes must be co-designed and take account of everyone using the system. It is possible to maintain high standards of governance without disproportionate, constantly changing, bureaucracy. We remain committed to working with the Scottish Government and our members in order to address these issues and forge a positive and productive way forward to ensure Scotland does not miss out on much required funding now or in the future. 

About us

The Scottish Council for Voluntary Organisations (SCVO) is the national body representing the voluntary sector.Supporting 45000 voluntary organisations, 2000 members, 100,000+ staff, £1m volunteers. View the latest sector stats

SCVO’s policy works to ensure that the needs and concerns of the voluntary sector in Scotland are represented in the Scottish, United Kingdom and European Parliaments.

By acting as an authoritative and trusted voice for the sector, SCVO’s policy and research output is delivered through a strong evidence base and an engaged membership.

Further details about SCVO’s policy and research can be found at /policy-research

Contact

Jamie Flaherty, Public Affairs Officer Jamie.Flaherty@scvo.scot, 0131 474 6157