EU funding advice in Northern Ireland

I was on BBC Good Morning Ulster on Wednesday to try, against all the odds, to explain what will now happen to EU funding in Northern Ireland. Fundamentally, this is a matter of risk analysis.

To explain, before moving on to funding, there are fundamentally two ways the UK could commence the process of leaving the EU; first, it could “invoke Article 50” giving itself two years to negotiate exit terms; second, it could withdraw by extracting itself from all EU treaties. The first is much simpler, but arguably puts the UK in an extraordinarily weak negotiating position, so it is unclear which (if ultimately either) will be attempted.

Firstly, whatever agency or department or organisation or group or business you are working with, you need to check what funding you receive from the EU. This seems obvious, but it may not be. For example, if you are receiving project funding from your local Council, you may perceive this to be “Council funding”, but in fact it may come via the Special EU Programmes Body (which you may regard as “cross-border funding”) which itself comes from the EU (and is thus actually what is commonly referred to as “European funding”).

Secondly, once you have established what is “European funding” and what is not, you need to carry out a risk analysis. The likeliest scenario is that the United Kingdom will leave the European Union but remain within the European Economic Area (EEA; often referred to as the “Norway Model”) in early 2019. But there is a wide range of scenarios to place on that risk assessment: three key ones would be a quick exit from the EU (possibly switching, at least in effect, to the EEA from the end of this year); a slow exit from both the EU and EEA; and no exit from the EU at all. All of those, even the last, may have an impact on the EU’s potential to fund projects within the UK.

Thirdly, if we take the likeliest scenario, any programme funding already agreed (even if it is not already drawn down) should generally be safe until the end of 2018; most programme funding runs to 2020, and it is probable but not certain that will be honoured. Membership of the EEA would mean the UK continues to contribute to EU funds but also has access to some of the programme funding, such as for business R&D or academic research. Capital investment from the European Investment Bank (EIB) is also possible in the EEA, but becomes more difficult; existing agreements (such as the underwriting of Ulster University’s move from Jordanstown to Cathedral Quarter) should be honoured, though again it is not certain. There remains a significant risk around any future applications for EU funding for projects, programmes or businesses in a member state which is negotiating withdrawal from the EU; certainly it should be assumed any of these will be unsuccessful once Article 50 is invoked or the UK starts extracting itself from EU treaties.

A very significant issue with membership of the EEA outside the EU is that the UK then falls outside EU Law for agriculture and farming, rendering maintenance of rural development programmes highly unlikely. Most relevantly, this would mean the UK falls outside the Common Agricultural Policy, with (in Northern Ireland) responsibility for agricultural subsidies passing to the Northern Ireland Executive. The vagaries of the Barnett Formula (assuming it remains in place) mean there would be a shortfall, so that maintenance of funding at current levels would mean taking tens of millions from other departments such as Health and Education.

Fourthly, there is a significant issue if the UK also leaves the EEA, which is no doubt the position UKIP will come to adopt (with the risk that this will force other parties to move in its direction). A clean “out is out” would mean all EU funding were lost, almost certainly immediately at the moment of exit (two years from invocation of Article 50, or whenever the UK extracts itself from all EU treaties, whichever is first).

The whole issue will require careful monitoring. While the betting is currently on an EEA deal, UKIP pressure may force the UK Government towards a more “out is out” position, although in that case it is possible that would result in electoral defeat by a pro-EU coalition. For now, the key is to ensure what is EU funding and what is not; and to assume funding is safe to 2018-20 but that any new attempts carry high risk. Farmers in particular must prepare for withdrawal of CAP money, with the potential for it to be replaced by a much less favourable Northern Ireland-specific system.

All of this does mean the third sector will have to move towards greater collaboration, and farmers will have to diversify. This is not necessarily bad news in the medium to long term – in every risk there is opportunity!

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