What happens to EU funding after Brexit?

In 2016/17, the UK received over £5 billion in funding from EU programmes. Much of this went into research, infrastructure and agricultural projects. The UK’s preparations for leaving the EU have raised some questions about what will happen to this funding.

When will the EU funding stop?

The UK should continue to receive EU funding until the current programmes end. This was agreed in the political agreement reached by the UK and EU negotiators in December 2017. In the main, this means that funding should end in 2020, although it is possible that some programmes may go on a little longer.

The political agreement applies to programmes funded from the EU Budget. The UK also receives loans from the European Investment Bank (EIB). The UK will not be eligible for new loans from the EIB after 29 March 2019, when the UK leaves the EU.

Could the UK continue to receive EU funding after Brexit?

The majority of EU funding is only available to its Member States. The UK has stated that it may wish to continue to participate in some of the EU programmes that welcome non-Member States, after 2020. The UK’s future participation will be discussed in negotiations over the future EU-UK relationship.

Some EU programmes are open to countries that are not EU Member States. For example, the research and innovation programme Horizon 2020 is available to countries that are trying to join the EU, members of the European Free Trade Association, and those associated to the EU’s previous research and innovation programme.

However, full participation in EU programmes is usually dependent on countries agreeing to certain conditions. For example, Switzerland only became eligible to participate fully in Horizon 2020 in December 2016 when it agreed to allow free movement of people from the whole of the EU. EU draft negotiating guidelines say that if it wishes to participate in future programmes, the UK will have to meet the programmes’ conditions.

Will the Government replace this funding?

The Government has made a number of assurances guaranteeing funding. They have stated that structural and investment fund projects signed before the UK leaves the EU will continue to receive funding (from the Government if not from the EU) so long as they “provide value for money and support domestic strategic priorities”.

Agricultural funding will also be protected, with Environment Secretary Michael Gove promising that “the amount we allocate to farming support – in cash terms – will be protected throughout and beyond this period right up until the end of this Parliament in 2022.” This commitment is UK-wide and includes rural development schemes.  The UK Government envisages an “agricultural transition” from 2020 where current farm payments are maintained but revised and then replaced with new approaches. In England, the Government is consulting on transition options towards a system which pays farmers for “public goods” such as environmental enhancement.

The 2017 Conservative Manifesto said that “we will use the structural fund money that comes back to the UK following Brexit to create a United Kingdom Shared Prosperity Fund, specifically designed to reduce inequalities between communities across our four nations.” No further details on this Fund have emerged, although the Government’s Industrial Strategy and several Parliamentary questions have confirmed that the Government intends to consult on what the Fund should look like later this year.

There have been some suggestions that the Government could also create its own replacement for the European Investment Bank, if its preferred option of a continuing relationship with the Bank was not acceptable to the EU. However, Werner Hoyer, president of the EIB, has described this as an “enormous challenge”, saying it would take “at least a decade” to get such a bank to the requisite size.

Picture credit: Flagging support by Dave Kellam.  Licensed under CC BY 2.0 / image cropped.