Fresh research published today by the Directory of Social Change reveals that UK charities risk losing at least £258.4m in EU funds because of Brexit. The full amount is likely to be far higher due to the way many funds are distributed by intermediary agencies in the UK, making comprehensive data difficult to obtain and analyse.
The beneficiaries of hundreds of charities working in particular subsectors like overseas aid, research and conservation will likely be hardest hit, unless the UK government acts swiftly to replace these funds. Strong disparities in the distribution of funds across the UK home nations means that the impact will also vary significantly across regions.
Although Brexit negotiations are moving sluggishly forward, it could be less than two years until the UK leaves the EU – and with it the EU’s institutional funding streams, mainly the European Structural and Investment Funds. A ‘no deal’ Brexit could lead to an even sharper shock to the system, if currently awarded funds are suddenly cut off overnight.
Despite these clear risks, charities are not even among the 58 sectors that have been consulted on the potential impact of Brexit. And so far, the government has made only vague and piecemeal statements about the future of EU funds.
In 2016 HM Treasury pledged to continue to support projects which are agreed up to the point at which the UK departs the EU – subject to being ‘value for money’ and ‘in line with government’s priorities’. The 2017 Conservative Party manifesto also promised to use EU funds that come back to the UK after Brexit to create a ‘Shared Prosperity Fund.’ What priorities such a fund would have, what causes it would support and how it would function remains totally unclear.
Launching the report today, co-author Daniel Ferrell-Schweppenstedde said: ‘It’s nearly 2018 – but the future of EU funding after Brexit remains extremely murky. Government needs to clarify the situation urgently, because uncertainty is already affecting budgetary outlooks for many charities across the sector. Trustees and executives are being left in limbo, not knowing the future of current funding and needing to find alternatives which are thin on the ground. As funding plans which looked secure for years threaten to dissolve almost overnight, the threat of disruption to vital services grows day by day.’
Umbrella bodies like NCVO, ACEVO and UKCF have already called on government to use the money previously spent on European Structural Funds to create a successor to the European Social Fund. Others have urged government to ensure that EU funding currently accessed by charities and social enterprises is replaced from 2019 onwards.
DSC argues that some simple steps could be taken right now to provide charity trustees with clarity, to help them plan effectively. DSC calls on the government to:
· Clarify the level of funding for charities that will be maintained throughout the Brexit process, including a clear and detailed definition of the conditions under which present EU funding will be guaranteed.
· Provide a credible commitment on how EU funding will be replaced in full after the UK’s departure from the EU, and a clear timetable for this.
· Consult with the charity sector and the wider social sector in developing the potential UK Shared Prosperity Fund. This includes the strategic purpose, aims and priorities; how will it be administered; and how it will support critical social causes.