Memorandum from the Secretary of State
for Scotland
At the Committee's hearing on 21 June, I was
asked to provide a note about the treatment of European Structural
Funds within the public expenditure arrangements for Scotland.
I attach such a note (see annex), which describes
the broad context of public expenditure planning by the Scottish
Office (now Scottish Executive), including the operation of the
Barnett Formula; and which addresses the questions about "additionality"
of European funding in Scotland. Because similar questions have
been addressed to me by the European Committee of the Scottish
Parliament, I am sending a copy of this note to Mr Hugh Henry
MSP, Convenor of the European Committee.
At the European level, there are legal requirements
to demonstrate that European Structural Funds have an impact beyond
the level of domestic national expenditure. The UK supports such
requirements. The Commission investigates such matters carefully
and is satisfied with the Government's arrangements for managing
European funded programmes in the UK.
At the UK level, of course, the Government has
to find any extra resources for such European funded programmes
from within the total resources that can be prudently provided
for public expenditure given wider economic constraints.
For Scotland, total spending across a wide range
of programmes within the Scottish Assigned Budget is determined
by operation of the Barnett Formula, which links increases in
provision for Scotland with the total increase for comparable
programmes in England. Within the extra resources available for
Scotland through the Barnett Formula, the Scottish Office/Scottish
Executive has found additional resources for spending on programmes
which are eligible for European Structural Funds. Moreover, the
Scottish Office/Scottish Executive have had to have regard to
the requirements on the UK to demonstrate additionality to the
Commission, which are based on demonstrating increases in expenditure
provision compared with earlier periods.
In other words, at the local level within Scotland,
extra resources have been provided for programmes in receipt of
European Structural Funds. The actual level of provision has necessarily
taken into account the level of Structural Fund grants agreed
in plans with the Commission. Administration of these European
funded programmes in Scotland has been praised by the Commission,
in part because good projects have been forthcoming in good time
to maximise the take-up of funds available from Europe.
It is in the nature of the Barnett Formula that
it deals with the aggregate of all spending within the Scottish
Assigned Budget. Those who want to argue for special treatment
for particular programmes within the SAB need to consider the
wider implications of unilateral changes to the Barnett Formula,
which is intended to be fair to all parts of the UK, and for the
potential reduction in the Scottish Budget which might ensue.
Finally, at the same session, you asked for
specific information about aspects of the Scotland Office's Annual
Report and Accounts. I shall send you a separate note to answer
these questions very shortly.[6]
Dr John Reid MP
Secretary of State, Scotland Office
28 July 2000
6 See Evidence p 28. Back
| 
