EU funding, charities and the threat of a no-deal Brexit: Knowns, unknowns and what you need to know

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Sam Windett is the Director of Policy at Impetus. Impetus transforms the lives of young people from disadvantaged backgrounds by ensuring they get the right support to succeed in school, in work and in life.

The known unknowns

Certainties are pretty thin on the ground, but we do know some things about the voluntary sector and a no-deal Brexit. Namely, that the thousands of UK charities receiving money through the European Social Fund (ESF) are looking at long term business plans and finding a big question mark. That’s been the reality ever since the government outlined its intention to create a new UK Shared Prosperity Fund (UKSPF) to replace EU funding over two years ago.

ESF provides £500 million per year in England alone for programmes supporting people furthest from the job market into education, training and employment. Charities receive ESF to support vulnerable groups who may not access mainstream government services.

We have a great opportunity to build a much better system to deliver front-line support to disadvantaged communities after Brexit. It could even be world-leading if we get it right. But that requires excellent planning immediately.

Why the urgency?

The government has guaranteed all EU funding agreed before the UK leaves the EU, even in the event of a no-deal Brexit. That means successful bids for EU funding until the end of 2020 will be fully funded over the project’s lifetime. However, for some programmes, the end is beginning to come into view.

A consultation on UKSPF has been eagerly anticipated since 2017 but hasn’t yet materialised. Considering the time it took for the 2014-2020 European Structural and Investment Funds programme to go from design to getting money to disadvantaged communities – we can predict a long timeline to design a bigger, more effective initiative to be developed in partnership.

So far, we know the objective of the fund will be to strengthen ‘the foundations of productivity’, it will be UK wide and ‘engage’ devolved administrations. It will sit within the context of Local Enterprise Partnership (LEP) reforms, with their Local Industrial Strategies (LIS) setting the priorities for UKSPF spend. Beyond that, the future looks uncertain.

The latest hints suggest that more details will not be released until 2020, raising concerns that a replacement initiative will not be in operation by the time ESF runs out. Without one in place, there will be a significant gap in provision for disadvantaged groups, such as the £4million AIM4Work programme delivered by Shaw Trust which works with unemployed people aged over 25 experiencing common mental health conditions in South, North and East London. The consequences of a gap for vulnerable people, their communities and for charities would be catastrophic.

Who cares?

This resounding silence has not been for a lack of interest, including from politicians themselves. The Work and Pensions Committee held an inquiry into the future of ESF, concluding that urgent action is needed to replace these vital services to prevent programmes being ‘bankrupted’, which would be ‘disastrous’ for disadvantaged groups.

More recently, in July, the National Council for Voluntary Organisations (NCVO) and Employment Related Services Association (ERSA) sent a letter co-signed by 100 chief executives of charities and businesses to the new prime minister highlighting their concerns. We’ve also seen a flurry of activity from MPs asking questions about the UKSPF, with a debate earlier this month raising urgent concerns. As the shadow minister for employment, Mike Amesbury MP, noted, “The urgency now… is to get on with it and make it happen for communities.”

What does the government need to do?

The asks of government are simple:

  • Work on the planning process now, not next year, to prevent a funding gap between the closure of ESF projects and the distribution of UKSPF.
  • Guarantee 2021-27 levels of ESF funding in the 2020 Spending Review (the amount the UK would’ve received).

The government needs to commit to agreeing the design, budget and implementation processes around this fund in order to hit the ground running after the next three-year Spending Review. Despite many complexities and moving parts around these decisions, the government must be adept at planning for different scenarios by now. It’s possible for ministers, officials and sector experts to come together around this critical issue – it needs to be prioritised.

What can charities do?

UKSPF plans outline that any investments need to be ‘supported by strong evidence about what works at the local level’. Charities need to demonstrate what ESF has made possible and how we can build on this. At Impetus, we help charities to deliver better results to more disadvantaged people – find out more here.

Charities also need to ensure that LEPs are aware that:

  • Tackling productivity means tackling skills gaps, health inequalities and supporting disadvantaged groups into employment
  • Integration means transforming social economy and inclusivity
  • LISs need to reflect the workforce and issues of tomorrow, not just the businesses of today.

Charities shouldn’t give up calling for the government to engage with front-line providers about the design of UKSPF. If we succeed, the prize will be an improvement on ESF to help more people than ever before, engage with communities more effectively and guard against the issues whilst building on the opportunities a no-deal Brexit could bring.

For further information, read the ERSA and NCVO briefing paper and the House of Commons research briefing which provides a good summary. Want to see some ESF case studies? The government’s case study booklet is online here.

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