What Does the Latest Government Funding Announcement Mean for Your Business?
Two months on from the UK’s landmark decision to leave the EU, The Prime Minister Theresa May has yet to activate Article 50, and is unlikely to until at least next year, causing uncertainty for many SMEs.
What has been announced in recent days though by the Chancellor Philip Hammond, much to the relief of some SME owners is that the Treasury will step in and back any EU-funded projects relating to farming, agriculture, science, and various other schemes, agreed before this year’s Autumn Statement.
This includes EU structural and investment funds CAP pillar two, the European Social Fund, the European Maritime and Fisheries Fund and the European Regional Development Fund, including European Territorial Cooperation. Projects benefitting from the EU’s Horizon 2020 programme, which is financially rewarding research and innovation within member states until 2020, will also receive Treasury support.
The Chancellor’s reasoning for this is to “ensure that people have stability and certainty in the period leading up to our departure from the EU”, a move largely welcomed by Labour Shadow Chancellor John McDonnell. Mr McDonnell has however stressed the importance of Britain retaining its membership of the European Investment Bank.
Whether Treasury funding will be provided for relevant projects signed after the Autumn Statement and whilst we remain an EU member is still under discussion.
Farming is one UK industry that currently receives subsidies and payments from EU’s Common Agricultural Policy (CAP) and The National Farmers’ Union and The Country Land and Business Association (CLA) have both reacted positively to the news. The latter has though demanded the setting up of a domestic funding policy by 2021.
The announcement hasn’t been received quite so well in Scotland and Wales where Finance Secretary Derek Mackay and Welsh First Minister Carwyn Jones have respectively claimed that it “falls far short of what is needed” and “does not provide the long-term certainty needed.”
Northern Ireland’s Finance Minister Mairtin O Muilleoir agrees with his Scottish and Welsh counterparts by saying “there is a question mark over scores of other vital projects” as does Lord Porter, chairman of the Local Government Association, who states: “The continued uncertainty risks damaging local regeneration plans and stalling flagship infrastructure projects, employment and skills schemes and local growth.”
Shortly after taking office, Theresa May described small businesses as the “backbone” of the UK. That statement will be further put to the test over the coming months before we officially head through the Brexit door.
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