British government to guarantee billions of pounds to plug EU funding gaps

The British chancellor is pledging finance for certain projects currently backed by the EU

British government to guarantee billions of pounds to plug EU funding gaps

Philip Hammond. Image: Laura Lean / PA Wire/Press Association Images

The British government is to guarantee billions of pounds in funding to UK organisations that face losing EU cash because of Brexit.

Officials are pledging to plug the annual £4.5bn (€5.2bn) funding gap for farmers, universities and poorer regions across the UK.

Chancellor Philip Hammond will say on Saturday that farm payments, funding for infrastructure projects and university research programmes will be guaranteed until 2020 "to ensure that people have stability and certainly in the period leading up to our departure from the European Union".

Reports suggest 14 to 15 different EU schemes would be covered under the plan.

Mr Hammond wants to give certainty to recipients of EU funding and boost investment in a bid to stave off a Brexit-driven economic downturn. 

Last week, experts warned that UK faced a recession after the first snapshot of business activity since the vote showed it had been knocked sharply off course by the result. 

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

He will also pledge to fund all structural and investment projects, signed before the autumn statement later this year, beyond Brexit in a bid to ensure that universities and other organisations keep bidding for EU funds as Britain negotiates its exit from the bloc.

He will say: "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."

In July universities warned that academics in other EU countries were starting to withdraw joint funding applications with British researchers.

The announcement means farmers will continue to benefit from common agricultural policy pay-outs - worth nearly £2.4bn (nearly €2.8bn) in 2015 - in the next four years.

The British government is expected to develop a new scheme to support farmers once the UK quits the EU.

Projects paid for through EU structural funding - worth up to £2.3bn (€2.66bn) a year - will also be honoured.

The scheme helps fund roads and infrastructure investment in poorer areas as well as covering investment in science parks and research facilities.

The British government will have more money to play with after Brexit given that Britain will no longer have to pay in £8.5bn (€9.8bn) in net contributions to the EU once it exits the bloc.

While Mr Hammond is keen to reassure business, academics and farmers that EU funding levels will not be slashed, he has so far refused to guarantee a big increase in spending on the NHS in the light of Brexit.

Many voters opted to leave the EU after the Vote Leave team ran a powerful campaign message suggesting the £350m (€400m) in weekly gross contributions sent to Brussels could be redeployed and spent on the NHS instead.