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Hammond urged to do more to plug EU funding gap

Published 13/08/2016

Philip Hammond will guarantee Government funding for projects backed by the EU structural and investment fund which are signed off before this year's Autumn Statement
Philip Hammond will guarantee Government funding for projects backed by the EU structural and investment fund which are signed off before this year's Autumn Statement

Chancellor Philip Hammond has been urged to take further steps to provide certainty to businesses, scientists and farmers after guaranteeing any European Union funding they lose after Brexit will be paid by the Government.

In a major announcement which Mr Hammond said would cost around £4.5 billion a year, the Treasury will plug the post-Brexit funding gap for projects which receive EU structural and investment funds and which are approved before the Autumn Statement.

Projects that gain approval after the mini-Budget - expected in November or December - will be assessed by the Treasury to see if they should also get a guarantee.

Organisations that bid competitively for European Commission funding, such as universities applying for Horizon 2020 research money, will also have their payments underwritten.

And the Government will maintain Common Agricultural Policy pillar one funding for farmers until 2020, as a domestic system is put in place.

But industry bodies, representative groups and campaigners have called for further guarantees amid concerns that the likes of scientists and researchers have already missed out on funding due to uncertainty caused by the vote to leave the EU.

The Royal Society fellowship of scientists described Mr Hammond's announcement as "very welcome news".

But its president Sir Venki Ramakrishnan said some scientists had already missed out on collaborative projects because European colleagues were worried about funding.

He told BBC Radio 4's Today programme: "I think that is why this measure is so welcome because we have been hearing anecdotal reports of people not being willing to collaborate with certain UK collaborators because they weren't sure that they would be able to to stay for the full duration of the grant.

"People have been told that, so far there are anecdotal reports and we are trying to gather evidence to see the extent of this."

He called for an extension of the guarantee to projects that gain approval after the Autumn Statement.

"Our hope is that any grants that are awarded while we are still in the EU should be allowed to complete," he said.

The National Trust and British Chambers of Commerce said they were worried about the Autumn Statement cut off date.

A National Trust spokesman said: "We welcome the Government's decision to continue with funding for newly agreed and existing agri-environment schemes. But set against this is the continued uncertainty should new applications be restricted beyond this autumn. This would put at serious risk decades of effort by farmers and organisations like ours to protect and enhance our countryside."

British Chambers of Commerce acting director general Adam Marshall said projects "crucial to local business success and confidence" have been at risk since the referendum due to the lack of clarity over funding and welcomed the move.

But he added: "The delays that many worthwhile projects face in the approval process must also be cleared away - especially given the fact that the Treasury guarantee only covers projects signed by this year's Autumn Statement."

The CLA, which represents over 32,000 farmers, landowners and other rural businesses said the move was "vitally important" but called for a "world-leading" domestic funding policy to be drawn up and ready for 2021.

University of Aberdeen dean for Europe, Professor Dame Anne Glover, said: "The research community needs to continue pressure to ensure this commitment is fully honoured.

"We must also highlight the importance of having explicit responsibilities for science, engineering and technology in the Department for Exiting the EU as argued for by Scientists for the EU, the Royal Society and many others.

"Without a clear understanding of the link between science, engineering and technology and our economy the Government may inadvertently compromise our future."

Making the announcement, Mr Hammond said: "We recognise that many organisations across the UK which are in receipt of EU funding, or expect to start receiving funding, want reassurance about the flow of funding they will receive.

"That's why I am confirming that structural and investment funds projects signed before the Autumn Statement and Horizon research funding granted before we leave the EU will be guaranteed by the Treasury after we leave.

"The Government will also match the current level of agricultural funding until 2020, providing certainty to our agricultural community, who play a vital role in our country.

"We are determined to ensure that people have stability and certainty in the period leading up to our departure from the EU and that we use the opportunities that departure presents to determine our own priorities."

Labour welcomed the move but called for clarity over whether Britain would remain a member of the European Investment Bank, which funds infrastructure investment in areas like housing.

Shadow chancellor John McDonnell said: "We welcome Philip Hammond's decision to agree with Labour's calls for EU structural funds to be protected post-Brexit.

"This will help to give some reassurance to communities and businesses right the way across the UK.

"However, we also want to urgently hear the Chancellor speak up on the importance of keeping Britain's membership of the European Investment Bank as we have set out in Labour's five red lines for negotiations."

The Local Government Association said the commitment "falls well short" of a full guarantee around the future of all the £5.3 billion in regeneration funding promised to local areas.

LGA chairman Lord Porter said: "The continued uncertainty risks damaging local regeneration plans and stalling flagship infrastructure projects, employment and skills schemes and local growth."

The peer said much of the funding is tied up in proposals which have not received Government approval and called on ministers to "pull out all the stops" to get the projects signed off.

He went on: "The Government must also use the Autumn Statement to guarantee that local areas will receive every penny of EU funding they are expecting by the end of the decade, as well as honouring commitments to match fund EU monies with domestic funding.

"This guarantee needs to be made regardless of whether the money comes from the EU or is replacement funding and even if decisions over which projects it should be spent on have been made or not."

Welsh First Minister Carwyn Jones said the guarantee "does not go far enough" because it only covers "about half" of the regional funding due to Wales.

He went on: "We now need to hear directly from the UK Government about the detail of this announcement.

"We need a 'full guarantee' that funding will continue for our existing EU programmes to 2023.

"It's also not unreasonable to expect further funding to address Wales' economic and social needs, particularly support for our most deprived areas after this date."

National Farmers Union president Meurig Raymond welcomed the news and said it would allow time for a domestic system to be put in place.

"The Treasury's announcement today is positive for farmers," he said.

"I hope that this short-term certainty will help to deliver longer-term confidence and this is exactly what farm businesses need now."

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