UK Economics

UK will continue paying farm and other subsidies until 2020, Philip Hammond announces

THE UK Government will continue paying farm and other subsidies currently received from Brussels after Britain leaves the European Union, Chancellor Philip Hammond has announced.

Phillip Hammond and a Cotswold farmGETTY

Phillip Hammond campaigned for remain before the referendum

His dramatic guarantee until at least 2020 scotches scare stories put about by Remain campaigners that Britian would lose vital EU funding if the electorate dared to vote leave.

The move aims to answer fears among businesses, universities, local authorities and other organisations about future funding of current EU-funded schemes including those they may be in negotiation.

Farmers also faced uncertainty about the fate of their Common Agricultural Policy support deals worth more than £2billion once Britain leaves the EU.

The EU packages are currently worth a total of about £4billion a year to their British recipients.

Mr Hammond’s announcement aims to dispel fears stoked during the referendum by Remain campaigners about the risk to vital activities and research from severing their EU cash lifelines.

The Remain campaign also claimed Brexit would harm the economy so badly the Government would have less money to invest.

Phillip Hammond and Theresa MayGETTY

The move aims to answer fears about future funding of current EU-funded schemes

Leave campaigners rejected the fears and forecast a “Brexit dividend” from no longer having to pay the EU membership fee and from the boost they forecast the economy will enjoy from rejuvenated world trade opportunities once it is free of the bloc.

They also say Britain after Brexit can focus more closely and efficiently on its own priorities rather than relying on wasteful Brussels to recycle some of the cash it gets each year from UK taxpayers back to us in EU-approved farm, regeneration and other schemes.

Mr Hammond, who campaigned for Remain, has now moved to restore confidence among sectors currently looking to Brussels for backing.

We are determined to ensure that people have stability and certainty

Phillip Hammond

He is promising the Treasury will fully fund structural and investment fund projects which are signed before he delivers his Autumn Statement, even when the schemes’ lifetimes extend beyond Britain’s departure from the EU.

The Treasury will also assess whether to guarantee funding for specific projects that might be signed after the Statement but while Britain is still in the EU.

No date has yet been given for the Chancellor’s autumn “mini Budget” – his first major economic statement since the June 23 referendum and change of Government which saw him take over at Number 11 from George Osborne.

A farm in the UKGETTY

Farmers will be relieved as they receive large subsidies from the EU

But recent Autumn Statements have taken place in late November or early December.

There is also no date yet for when Britain will actually leave the EU following the British people’s decision in June’s referendum.

PM Theresa May has said only that she will not invoke Article 50 of the Lisbon Treaty – triggering up to two years of Brexit term negotiations – this year.

Where UK organisations bid directly to the European Commission in competitions for EU money while Britain is still in the EU – such as universities participating in the Horizon 2020 research fund – the Treasury will underwrite the payments of such awards including when projects continue beyond our actual Brexit, Mr Hammond is also promising.

Phillip Hammond with a red folderGETTY

PM Theresa May has said that she will not invoke Article 50 this year

Sources said the announcements gave British firms and universities certainty about future funding and reassured them about continuing to bid for EU funds while the UK remains in the bloc.

Mr Hammond will also guarantee that current support paid through the Common Agricultural Policy’s “Pillar 1” system of direct payments to UK farmers will continue until 2020, as part of a transition to new post-Brexit British arrangements.

Mr Hammond said: “The UK will continue to have the all of the rights, obligations and benefits that membership brings, including receiving European funding, up until the point we leave the EU.

“We recognise that many organisations across the UK which are in receipt of EU funding, or expect to start receiving funding, want reassurance about the flow of funding they will receive.

“That’s why 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.

“The Government will also match the current level of agricultural funding until 2020, providing certainty to our agricultural community who play a vital role in our country.

“We are determined to ensure that people have stability and certainty in the period leading up to our departure from the EU and that we use the opportunities that departure presents to determine our own priorities.”

Funding under EU programmes fluctuates year to year depending on decisions made.

But in 2014-15 the total sent back to Britain through the Common Agricultural Policy’s two main funds, the Social Fund, the Regional Development Fund and other such schemes totalled just over £4.6billion, up from £3.9billion in 2013-14 and £4billion the previous year.

In addition, UK universities and businesses successfully bid for nearly £1.5billion a year from EU funds, including over £1billion for research.

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