On Friday 23 June in Glasgow, the Industrial Communities Alliance (ICA) launched their proposals for a Post-Brexit Regional Policy, in the first of a series of events scheduled to take place throughout the country. The ICA’s proposals partly respond to the Conservative Party Manifesto, promising the establishment of a UK Shared Prosperity Fund, the modalities of which are yet to be defined.
Professor Steve Fothergill, the ICA’s National Director, was sitting on a panel composed of Colin Beattie MSP, Richard Leonard MSP, and Malcom Leitch, Co-ordinator of the West of Scotland European Forum (WSEF), and chaired by Roddy MacDonald, Director of ICA Scotland.
Roddy MacDonald introduced the session, intended to stimulate debate on the consequences of Brexit, as seen through the prism of the industrial communities. Professor Steve Fothergill proceeded to provide a brief history of the ICA, whose forerunners run back to the 1980s. He went on to describe the on-going challenges faced by such areas in some parts of the UK. Despite clear progress in the way of economic development, these communities have still to breach the skill, output, and economic growth gap separating them from the more dynamic South-East of England. Populations in such areas are more likely to be unemployed or resorting to welfare benefits due to low-paid, precarious jobs.
Prof Fothergill then provided a brief survey of European funding in Scotland and the UK. EU contributions include the European Regional Development Fund (ERDF), the European Social Fund (ESF), the European Agricultural Fund for Rural Development (part of the Common Agricultural Policy), and the European Maritime Fisheries Funding (EMFF). These funding streams are expected to come to an end in 2020. The EU Aid State Rules regulating the extent of UK subventions to businesses may also be loosened, or disappear in the advent of a “hard Brexit”.
While the disappearance of EU funding poses a challenge, increased flexibility in legislation on national aid could be an opportunity for industrial communities, Prof Fothergill declared. In addition, the Treasury’s promise to support projects signed off before Brexit is also a positive signal.
The ICA’s manifesto outlines some possible pitfalls of the Conservative manifesto’s proposition, and suggests six steps for regional policy beyond Brexit:
- Deliver the new UK Shared Prosperity Fund to take over the responsibilities of the EU Structural Funds
- Set the new Fund’s budget at a level that not only compensates for the loss of EU Funding (£1,5bn a year) but also provides additional resources to match the scale of the challenge
- Structure the new Fund in ways that deliver support more efficiently, more flexibly and with more local authority control
- Allocate the Fund in fair and transparent ways that give priority to the development needs of less prosperous regions and local economies
- Reform the rules on financial support to companies to enable the delivery of more effective support in the places that need it most
- Exploit the opportunity provided by this major revision of regional policy to align a wider range of public spending with the priority of local and regional economic development
Colin Beattie reacted favourably to these propositions, but criticized the lack of clarity with regards to the UK Shared Prosperity Fund. He stressed the importance of ensuring that the Scottish and Welsh nations would participate in the elaboration of any future regional policy, stating that it should not be subsumed within the Barnett formula, but that Scotland and Wales should be thought of as nations, with their own regions.
Richard Leonard stated that the future regional policy should aim at bridging the gap between industrial communities and the rest of the UK, but also at correcting disparities within communities themselves. He remarked that Scotland itself would have to face specific challenges, due to over 34% of Scottish economy being overseas-owned.* He also expressed the wish that the future Fund would correct disparities instead of focussing on enhancing excellence in top-performing regions and sectors.
In his concluding intervention, Malcolm Leitch pointed to a 20-year-long tendency towards centralization, favouring economic development in the South East. He also remarked that a regional policy was “no quick fix”, but needed multi-annual planning as opposed to short-term, project-based policies. While acknowledging the benefits of EU funding, he also echoed criticisms of European bureaucracy and its damaging effect for creativity in policy. He finally advocated “ a regionally differentiated product” that would take local challenges into account, and concluded, citing Professor Kevin Morgan, that “treating unequal regions equally is not a recipe for regional justice.”
In their questions to the speakers, members of the audience criticized the tendency to place the burden of responsibility solely on Whitehall, and raised the issue of the Scottish Government’s own responsibility. Criticism of the ICA’s proposal also emerged from the ensuing conversation. For example, Professor John Bachtler (Strathclyde University) pointed out that the paper fell short of defining a clear approach to regional policy, focusing on the management of funding rather than on the commitment to social justice that should fuel reflections on the development of industrial communities.
* Richard Leonard's statement on this topic can be found here. According to a 2013 ONS survey, Scotland has "the highest proportion of value added contributed from foreign-owned businesses to the non-financial business economy, at 34.6%". See also The Scotsman for SNP responses.
The ICA's full proposals can be found on their website.
Further information on European Regional Funds in Scotland may be found on the Scottish Government’s webpage, including reports on their implementation for the period 2014 – 2020.