The UK Government’s replacement for EU structural funding should be devolved, a Scottish minister has said.

The Shared Prosperity Fund was set up to replace cash provided to the UK as part of the European Union.

Earlier this year, the UK Government announced Scotland would receive £212 million over the next three years.

But the Scottish Government has claimed EU funding would have amounted to £549 million.

A UK Government source said the Scottish Government were not factoring in continuing EU funding, adding that the SPF would completely replace cash from the bloc in the coming years, adding that ministers were trying to “manufacture a phony row”.

The funding will be issued directly to local authorities by the UK Government, with all plans submitted for this year’s round having been approved.

Scottish ministers have accused the UK Government of “ignoring” the devolution settlement.

Employment minister Richard Lochhead said: “EU structural funds have made a real difference across the country, helping more people into work and delivering new skills through better training and support.

“This welcome contribution from the EU has been eradicated by Brexit and the UK Government’s replacement for EU funding has fallen far short in both the quality and quantity of what is required.

“The UK Government has ignored the devolution settlement and failed to recognise the authority of the Scottish Government in devolved areas.

“This replacement for EU funding ought to be fully devolved, allowing funding to flow to regions and communities in line with shared Scottish policies, designed to best serve Scottish needs.”

The minister went on to claim that councils are “racing against the clock” to spend their funding by March, or risk losing it.

He added: “The approach taken thus far by the UK Government is against the principles of partnership working and risks diluting Scottish Government efforts to transform the economy and support families and sustainable public services during this cost-of-living crisis.”

A UK Government spokesperson said: “We do not recognise these claims. The UK Government is putting local people in Scotland front and centre in how UK money is spent, enabling communities to invest in the priorities that matter to them.

“This upholds our commitment to match EU structural fund receipts for each nation while also giving local areas a greater say in how the money is used.”