“Chaos” over £450m of unspent EU funds

Several crucial infrastructure projects, such as the Eriskay causeway, have been made possible through EU structural funds.Several crucial infrastructure projects, such as the Eriskay causeway, have been made possible through EU structural funds.
Several crucial infrastructure projects, such as the Eriskay causeway, have been made possible through EU structural funds.
The Scottish Government has been accused of “fiscal incompetence” after it emerged that up to £450 million of EU funding will go unspent because of failure to put forward projects which match criteria for structural funds.

​Although the UK has left the EU, the withdrawal agreement allowed it to utilise the funds which finally close this month. The money will not be “handed back” but will simply not be drawn down if eligible projects have not by now been earmarked.

The alleged failure has particularly serious implications for the Highlands and Islands which have in the past been major beneficiaries of EU funds. In 2022, a report commissioned by the Scottish Government warned that funding was being lost in the Highlands and Islands due to administrative inefficiencies.

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Money still unallocated by the Scottish Government related to anti-poverty, carbon reduction and rural development objectives. The figures, first reported in the Sunday Times, are based on analysis of updated data from the European Commission.

The Scottish Government has maintained that the figures are not yet finalised as spending can continue for another year. Finance minister, Kate Forbes, said at Holyrood: “I have looked closely at the source of the figures that were reported by the European Commission’s open data portal and cannot… arrive at the £450 million that was quoted”.

Ms Forbes said they would “endeavour to spend as much of it as possible” by next year.

However, the data shows that 199 million euros have already been “lost” with another 331 million euros uncommitted. Taking account of inflation, this produced the £450 million figure.

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Ms Forbes said that 60 per cent of allocations under the programmes are made through local authorities and the rest through quangos like NatureScot and Skills Development Scotland. She added: “We will continue to provide that money to partners at our own risk then claim reimbursement from the European Commission, which is the way that those schemes have operated for years”.

Labour spokesman Michael Marra said: “Audit Scotland has confirmed that access to the funds is available until the end of June. According to the EU’s open data platform, the SNP has 27 days to spend €280 million. Even by its own standard of fiscal incompetence, that is chaos”.

According to the Sunday Times: “Scotland is expected to return 28 per cent of the European structural and investment funding it received in the past six years having failed to allocate the cash. By comparison, Wales is on course to return nine per cent, England six per cent and Northern Ireland two per cent”.

The Scottish Government’s handling of EU structural funds has repeatedly been criticised in recent years and on five occasions, reimbursement of funding has been suspended for such breaches as “deficiencies in first-level management verification” and “irregularities regarding eligibility of expenditure” and “rules on audit trail”

According to the Sunday Times: “There have been a total of 27 suspensions across the EU during the same period, meaning Scotland is responsible for 19 per cent of all such penalties”.