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Brexit – The Story So Far

At GRANTfinder, we have been helping to build strong communities through funding for more than 30 years. In the challenging post-referendum landscape we know that more than ever, our clients need impartial information.

Our POLICYfinder service works together with GRANTfinder and RESEARCHconnect to create a complete specialised funding and policy solution – offering a user-friendly, accurate and continuously updated package.

To download The Story So Far – the first in our series of POLICYfinder Brexit Briefings – click on the briefing image.

The following are FAQs that have been posed to us by our clients. Please click on any of the question links to access the answers.

If you have a question to pose regarding what the UK's exit from the EU might mean, the team here at GRANTfinder will be happy to respond.

Jump to a question:

 

The UK has voted to leave the European Union – what happens now?

On 29 March 2017, Prime Minister Theresa May triggered Article 50 of the Lisbon Treaty, formally notifying the European Union of the UK's intension to leave. The UK's permanent representative in Brussels, Sir Tim Barrow, presented a letter from the Prime Minster to European Council president Donald Tusk at 12.30pm, officially starting the Brexit process.

Addressing the House of Commons, the Prime Minister said that leaving the EU presented "a chance to shape a brighter future for our country". Mrs May also confirmed the publication of a white paper confirming plans to convert the 'EU acquis' into British law as part of a 'Great Repeal Bill', and that the Government will put the final deal agreed between the UK and the EU to a vote in both Houses of Parliament before it comes into force.

The Legislating for the United Kingdom's Withdrawal From the European Union white paper was published on 30 March 2017, setting out plans to repeal the European Communities Act 1972 (ECA) on the day the UK leaves the EU. The ECA is the principal piece of legislation that gives effect to EU law in the UK and the legislation which makes EU law supreme over UK law. The Great Repeal Bill will convert directly-applicable EU laws into UK law, but will not aim to make major changes to policy or establish new legal frameworks in the UK beyond those which are necessary to ensure the law continues to function properly from day one.

The Government will also introduce a number of further bills during the course of the next two years to ensure it is prepared for withdrawal – and that Parliament has the fullest possible opportunity to scrutinise this legislation.

The Prime Minister said that exit negotiations with the EU would take into account the specific interests of every nation and region of the UK and that the Government would consult fully on which returned powers should reside in Westminster and which should be passed on to the devolved administrations. Mrs May also reiterated that the UK wishes to maintain the common travel area with the Republic of Ireland, saying there should be "no return to the borders of the past".

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What does the UK want from negotiations with the EU?

On 17 January 2017, Prime Minister Theresa May set out the UK's position, saying that the UK has "12 objectives that amount to one big goal: a new, positive and constructive partnership between Britain and the European Union". Mrs May added that the UK's negotiating priorities would be driven by four underlying principles: "certainty and clarity; a stronger Britain; a fairer Britain; and a truly global Britain".

Confirming that the UK would leave both the EU single market (which allows the free movement of goods, services and workers between members) and EU customs union (in which members do not impose tariffs on each other's goods and impose the same tariffs on goods from outside), the Prime Minister said that remaining within either would mean "not leaving the EU at all". Instead, the Government will seek a "bold and ambitious" Free Trade Agreement with "greatest possible access" to the single market and a new customs agreement, with the Prime Minister saying she is "open minded" about how this could be done. However, Mrs May added that she would rather leave the EU with no trade deal than accept one that was "bad" for Britain.

The Government has stated that it wants to guarantee rights of EU citizens living in Britain and rights of British nationals in other member states as early as possible, and that it will protect the rights of workers set out in European legislation and "build on them". The Prime Minister said that the UK would welcome agreement to continue to collaborate with its European partners on major science, research and technology initiatives, and will continue to work closely with its European allies in foreign and defence policy.

Mrs May made it clear that she intended to conclude negotiations by the end of the two-year period after triggering Article 50. However, she acknowledged that a phased process of implementation would be in the interests of Britain, the EU institutions and member states.

On 2 February 2017, the Government published The United Kingdom's Exit From and New Partnership with the European Union. This white paper reiterates the 12 negotiating principles sets out in the Prime Minister's speech of 17 January 2017.

The white paper confirms that the UK will seek a new strategic partnership that will underpin free trade between the UK and EU, recognising the deep integration and harmonisation achieved as members of the EU, as well as the closest possible cooperation on key issues like security, foreign policy and science and technology.

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What is the European Union's negotiating position?

In his presentations to the European Parliament, EU Chief Negotiator Michel Barnier has stressed a number of principles for the negotiations:

The 'four freedoms' (free movement of goods, free movement of services and freedom of establishment, free movement of persons (and citizenship), including free movement of workers, and free movement of capital) must be indivisible.

  • Any transitional agreement must unambiguously be limited in time.
  • EU membership must always remain the most advantageous status.
  • Any new relationship must be based on a level playing field and on respect for the rules of competition.
  • The balance of rights and obligations agreed with non-EU countries must be taken into account.

The EU also believes that continued close cooperation with the UK is desirable in the field of defence and security.

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When will negotiations start?

The next formal step will take place on 29 April 2017, when the President of the European Council, Donald Tusk will convene an extraordinary meeting of the Council to adopt by consensus a set of guidelines on the orderly withdrawal of the UK from the EU. These guidelines will define the overall principles that the EU will pursue during the negotiations based on the common interest of the European Union and of its Member States.

After the adoption of the guidelines, the European Commission will present to the Council a recommendation to open the negotiations. This will be agreed by the College of Commissioners, four days after the meeting of the European Council. The Council will then need to authorise the start of the negotiations by adopting a set of negotiating directives. They must be adopted by a strong qualified majority (72% of the 27 Member States, i.e. 20 Member States representing 65% of the population of the EU27). Once these directives are adopted, the EU negotiator, Michel Barnier, is mandated to begin negotiations with the withdrawing Member State.

Negotiations will be held in Brussels and the EU anticipates that official talks will begin in June 2017 and last approximately 18 months, ending by October/November 2018. During the negotiation period, EU laws will still apply in the UK and the UK will continue to participate in other EU business as usual. However, the UK will not be allowed to participate in internal EU discussions or decisions on its intention to leave.

Practical issues, such as language regime and negotiation structure, will be agreed jointly between the EU and UK negotiators.

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Can triggering Article 50 be reversed?

Article 50 does not provide for the unilateral withdrawal of notification. The UK's letter of notification is considered the legal point of no return for leaving the EU.

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What happens after the two-year negotiation period?

A final exit deal between the UK and the EU will need to be approved by a 'qualified majority' of EU governments, after obtaining the consent of the European Parliament. But, if the final agreement cuts across policy areas controlled by the individual Member States, it will be classed as a 'mixed agreement' and will need to be ratified by EU leaders via a qualified majority vote – a majority in the European Parliament and by the remaining 27 national parliaments across the EU. Only then will the UK be able to officially leave the EU.

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What if no deal is reached?

The EU Treaties governing membership will simply cease to apply to the UK two years after notification of triggering Article 50 and the UK will automatically leave the EU without an agreement on its future relationship.

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What happens during the next two years?

Until the UK formally leaves the EU at the end of the negotiating period, it remains a full member state with no changes as a result of the decision to leave. All existing EU funding agreements and arrangements remain valid and in place as long as the UK is still a member of the EU. UK applicants remain eligible for all EU funding available before the referendum, although this will inevitably change after the UK's exit. While new agreements with the EU will bring new and/or restructured funding opportunities, UK organisations should seek to maximise their window of opportunity while they remain eligible for EU funds as part of a member state.

The EU Unit in the Cabinet Office will lead civil service work on Britain's exit from the EU and present options and advice to the Prime Minister and Cabinet. The unit will be led by Oliver Robbins, Permanent Secretary (Department for Exiting the European Union). The Permanent Secretary will support the Secretary of State for Exiting the European Union, David Davis in the work of the department. The process of working through an estimated 80,000 pages of EU agreements enacted over the past five decades may also create new opportunities for organisations to provide support services in a range of fields.

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Will UK organisations be able to apply for EU funding after it leaves the EU?

Once a new agreement with the EU is in place, there will be opportunities for the UK to continue to participate in EU funding programmes despite the fact that it will no longer have status as an EU Member State. Many EU funding streams are available to non-EU countries, including key programmes such as Horizon 2020 and Erasmus+.

For example, Horizon 2020 classifies non-EU countries according to their level of research capacity, socio-economic development and whether they have an association agreement with the EU. 'Associated Countries' participate in Horizon 2020 under the same conditions as EU Member States. Associated Countries may apply to all programmes and instruments, individually or in consortia; automatically obtain funding if their proposal is successful; and must adhere to the same Horizon 2020 Rules of Participation as Member States.

The ten non-EU countries currently associated with Horizon 2020 are Iceland; Montenegro; Norway; Serbia; Albania; Turkey; Bosnia and Herzegovina; Israel; the Former Yugoslav Republic of Macedonia; and Moldova. If the UK seeks (and is permitted) continued participation in Horizon 2020, it is most likely to be as an associated country.

International European Interest Organisations are also automatically eligible for Horizon 2020 funding. These organisations have a majority of members from EU and Associated Countries and promote science and technology cooperation in Europe.

Erasmus+ is the EU programme for education, training, youth and sport. It currently provides opportunities for UK participants to study, work, volunteer, teach and train abroad in Europe. Currently five non-EU countries including Norway and Iceland are classed as 'Non-EU Programme Countries' and fully take part in Erasmus+. Other 'Partner Countries' that neighbour the EU are also able to take part in certain Actions, subject to specific criteria or conditions.

The examples of Horizon 2020 and Erasmus+ indicate that established routes exist for future UK participation and access to EU funding as a non-Member State, but these will be subject to negotiation and approval of the UK's eligibility on a programme-by-programme basis.

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How will leaving the EU impact funding for key UK sectors?

On 3 October 2016, Chancellor of the Exchequer Philip Hammond confirmed that the Government will guarantee EU funding for structural and investment fund projects (including agri-environment schemes) signed after the 2016 Autumn Statement and which continue after Britain leaves the EU.

Funding for projects will be honoured by the Government, if they meet the following conditions:

  • They are good value for money.
  • They are in line with domestic strategic priorities.

Each Government department will take responsibility for the allocation of money to projects in line with these conditions and the wider rules on public spending. Where the devolved administrations sign up to structural and investment fund projects under their current EU budget allocation prior to Brexit, the Government will ensure they are funded to meet these commitments.

The Chancellor stressed that while the UK is still a member of the EU, British businesses, farmers and other organisations must be entitled to apply for EU funds and should continue to apply for EU funding.

This announcement builds on assurances given in August 2016 that all multi-year projects administered by government with signed contracts or funding agreements in place, and projects to be signed in the ordinary course of business before the 2016 Autumn Statement will be fully funded, even when these projects continue beyond the UK's exit from the EU.

Each Government department will take responsibility for the allocation of money to projects in line with these conditions and the wider rules on public spending. Where the devolved administrations sign up to structural and investment fund projects under their current EU budget allocation prior to Brexit, the Government will ensure they are funded to meet these commitments.

European Structural and Investment Funds (ESIF) included in these assurances include the following:

  • The European Agricultural Fund for Rural Development – CAP Pillar 2
  • The European Social Fund (ESF)
  • The European Maritime and Fisheries Fund
  • The European Regional Development Fund (ERDF) including European Territorial Cooperation

In the medium term, the Treasury will continue to work with departments, Local Enterprise Partnerships and other stakeholders on arrangements for ESIF projects that might be signed after the Autumn Statement, but while the UK remains a member of the EU.

In a letter from David Gauke, Chief Secretary to the Treasury to David Davis, Secretary of State for Exiting the European Union, the Treasury has also assured UK organisations (such as universities and businesses participating in Horizon 2020) that bid directly to the European Commission on a competitive basis for EU funded multi-year projects that they should continue to do so while the UK remains a member of the EU. The Government will work with the European Commission to ensure payment when funds are awarded. The Treasury will also underwrite the payment of these awards, even when specific projects continue beyond the UK's departure from the EU.

The Treasury has reassured the agricultural sector that it will receive the same level of funding that it would have received under Pillar 1 of the Common Agricultural Policy (CAP) until end of the Multiannual Financial Framework in 2020, alongside considering the options for long-term reform beyond that point. Funds will be allocated using the principles of CAP Pillar 1 as the agricultural sector transitions to a new domestic policy framework.

The administration of EU funding is largely devolved in Scotland, Wales and Northern Ireland, and the Treasury is offering the devolved administrations the same level of reassurance in relation to programmes for which they expected to rely on EU funding. The Treasury will also work with the devolved administrations on subsequent funding arrangements to allow them to prioritise projects within their devolved responsibilities.

In addition to these measures, the Government has acknowledged the need to address the future of all EU-funded programmes once the UK has left the EU. It plans to consult closely with stakeholders to review all current EU funding schemes, to ensure that any ongoing funding commitments best serve the UK's national interest, while ensuring appropriate investor certainty.

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What does leaving the EU mean for areas that have received large amounts of EU funding in the past?

The Government's commitment to guarantee funding for all structural and investment fund projects signed before the 2016 Autumn Statement even when they continue beyond the UK's departure from the EU means that in the short-term, regions receiving high levels of EU funding will not suffer an immediate funding shortfall.

One possible measure to redress the future loss of EU funding would be a revision of the Barnett Formula, which dictates the level of public spending in Scotland, Wales and Northern Ireland and is based on the population of each nation and which powers are devolved to them. However, the current political instability – particularly with regards to the Scottish Government's stated desire to remain part of the EU – would seem to preclude any immediate redistribution.

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What can UK organisations do now?

Don't panic! The negotiation period gives organisations some lead time to prepare resilience strategies and identify potential alternative funding sources. Across all sectors, organisations already involved in EU partnerships or receiving EU funding should seek to strengthen those relationships. UK groups, organisations and bodies are natural partners and collaborators with their European counterparts based on their shared history and achievements. By emphasising their common aims, objectives and values ahead of entering into new, restructured relationships with the EU, UK organisations can lessen the impact of exit.

Organisations should also begin exploring alternatives to EU funding, whether that be through new international partnerships and funding streams, or via alternative fundraising methods. For example, according to European Commission figures, approximately €4.2 billion was successfully raised through crowdfunding platforms in the EU in 2015, compared with €1.6 billion in 2014. Of that, the UK had by far the largest amount raised and number of projects funded through crowdfunding of all EU countries. The 2015 UK Alternative Finance Report showed that the average deal size in the United Kingdom stood at £523,978, a large increase from the 2014 average of £199,095.

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Useful links

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Further information

As the market leaders of grants and policy information, GRANTfinder is committed to maintaining user-friendly tools to help organisations in every sector navigate the post-referendum landscape. Our Content and Consultancy teams have decades of research and policy experience and are ideally placed to support clients in adapting to the new challenges and opportunities ahead.

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