Our Borderlands - Our Future : Final Report - Scottish Affairs Contents


5  European Union structural funding

104. The European Commission categorises the European Union into statistical areas known as Nomenclature of Units for Territorial Statistics (NUTS) to allow for the collection, development and harmonisation of EU regional statistics and for socio-economic analyses of the regions. NUTS 1 areas are the major socio-economic regions, which are subdivided into NUTS 2 areas.[163] NUTS 2 areas are used for the allocation of the European Structural Funds on the basis of the Gross Value Added (GVA) per head compared to the EU average.[164]

105. EU Funding for 2014-2020 is allocated to three types of regions, according to how their GDP per capita compares with the EU average. These are defined as follows:

·  Less developed regions, whose GDP per capita is less than 75% of the average for the EU;

·  Transition regions, whose GDP per capita is between 75% and 90% of the EU average;

·  More developed regions, whose GDP per capita is above 90% of the EU average

Determining whether a region qualifies is a question of comparing its per capita GDP to the EU average. The formula for allocating the funding differs for each type of region, but it is structured so that less developed regions get more funding per head than transition regions, which in turn get more than more developed regions.[165]

106. Scottish NUTS 2 regions fall into the following groups:

·  Transition: Highlands and Islands

·  More developed: Eastern Scotland; South Western Scotland; and, North Eastern Scotland.

107. Based on the economic profile of the south of Scotland, it has been suggested that the NUTS 2 boundaries should be re-drawn. The inclusion of Dumfries and Galloway in the South Western Scotland region, and of the Scottish Borders in the Eastern region, means that the economic needs of these areas are masked by the relative economic strength of cities such as Edinburgh, Dundee and Glasgow.[166] As a result, the south of Scotland area may be missing out on higher levels of transition funding, to which they would be entitled if the existing boundaries were re-drawn. Such a redefinition of NUTS 2 boundaries might even dovetail with the cross-border area covered by the Borderlands Initiative outlined above.

108. We found wide cross-party agreement that the current NUTS 2 configuration does not accurately represent the spatial economic geography of Scotland.[167] Over the past decade, representations have been made by Scottish Borders Council, Dumfries and Galloway Council and the South of Scotland Alliance to the Scottish and UK Governments calling for changes in the NUTS 2 boundaries. These representations have not succeeded thus far because of the relatively small population of this area, which is well below the guideline NUTS 2 region average size.

109. Two possible options that would satisfy the population target for NUTS 2 funding were outlined by Dumfries and Galloway Chamber of Commerce:

    a) to include parts of Ayrshire and South Lanarkshire, which border the region and have similar population and economic characteristics.

    b) to include similar areas in Northumberland and Cumbria.

110. The Chamber advocated the first option,[168] as redrawing the NUTS 2 region on an east-west basis would more accurately describe the region and define an area with similar characteristics to that of Highlands and Islands.[169] Both Scottish Borders Council and Dumfries and Galloway Council agreed on the designation of the south of Scotland as a NUTS 2 area.[170] Alistair McKinnon, Scottish Enterprise suggested, "if you take in South Lanarkshire and parts of South Ayrshire…that would not negatively impact on the existing NUTS areas that Ayrshire and Lanarkshire are in, so everyone is a winner."[171]

111. RSA Fellows Borders Network stated that the relevant local authorities should be "encouraged to maintain their laudable momentum and initiative," and that local authorities and the Scottish Government should proceed with the initiative "unimpeded and without interference, to achieve their stated strategic objective, which involves delicate and detailed negotiations."[172] Joan McAlpine MSP stated that "it is pivotal for the UK Government to work with all stakeholders to lobby for this re-designation as soon as possible."[173]

112. We recommend that the NUTS 2 boundaries in the south of Scotland should be redrawn to ensure greater structural funding for the region. We are satisfied that this can be achieved without compromising other existing administrative boundaries, and without causing a reduction in the likely overall levels of funding which would be allocated to Scotland. This could result in significant sums of additional funding being allocated to the south of Scotland.

113. We urge the UK Government to work with the Scottish Government and local authorities to redraw the NUTS 2 boundaries in Scotland in order to create a NUTS 2 region for the south of Scotland that does not incorporate the Central Belt. We also expect the UK Government to facilitate this at an EU level.


163   European Commission (Eurostat), NUTS - Nomenclature of territorial units for statistics, accessed 2 March 2015 Back

164   European Commission, Regional Policy - how does it work? Is my region covered?, accessed 7 July 2014. Currently, Scotland is divided into four distinct regions for the purposes of the allocation of NUTS 2 funding: North Eastern Scotland, Eastern Scotland, South Western Scotland and the Highlands and Islands. The south of Scotland is not a defined NUTS 2 area. The Dumfries and Galloway region is part of the South Western Scotland NUTS 2 area, which also includes Glasgow; The Scottish Borders are part of the Eastern Scotland NUTS 2 area, which also includes the cities of Edinburgh and Dundee. Back

165   Eur-Lex - access to European Law, Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013, accessed 7 July 2014 Back

166   Dumfries and Galloway Council area is part of the South Western Scotland region along with Glasgow, Scottish Borders Council area is part of the Eastern Scotland region along with Edinburgh and Dundee.- Office for National Statistics, NUTS: Scotland, accessed 13 March 2015 Back

167   Support for such a process also came from NHS Borders (NHS Borders, (BOR0016)), Scottish Borders Chamber of Commerce (Scottish Borders Chamber of Commerce, (BOR0005), para i), AIMUp, Peebles Community Council and Peebles Community Trust (AIMUp, Peebles Community Council and Peebles Community Trust, (BOR0017), para 2.1) and Scottish Land and Estates (Scottish Land and Estates, (BOR0012), para i).  Back

168   Dumfries and Galloway Chamber of Commerce, (BOR0002), para 4.3 Back

169   Ibid., para 4.2 Back

170   Scottish Borders Council, (BOR0003), para 14; Dumfries and Galloway Council, (BOR0006), para 2.18 Back

171   Q81 Back

172   RSA Fellows Borders Network, (BOR0008), para 9 Back

173   Joan McAlpine MSP, (BOR0020), para 4.1.1 Back


 
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Prepared 26 March 2015