Lost EU funding could be redirected to business, foundation policy director warns

Duncan Shrubsole of the Lloyds Bank Foundation says the money guaranteed to charities by the government up to 2020 could instead be used to keep businesses and jobs in deprived areas

European Union: Brexit could see charities lose money
European Union: Brexit could see charities lose money

Charities that receive regional funding from the European Union could face losing future funding to local businesses after Brexit, charity trustees have been told.

Speaking at a session at the National Council for Voluntary Organisations’ trustee conference in London yesterday, Duncan Shrubsole, director of policy, partnerships and communications at the Lloyds Bank Foundation, said the economic ramifications of leaving the EU could mean that existing European Social Fund money was redirected towards the business sector.

About £200m in European Social Funding is handed out to charities in the UK each year and the government has guaranteed existing funding until 2020, although there is no definite guarantee for any funding after that time.

But Shrubsole warned that because the state of the public finances "remains rocky and the deficit remains high", it was possible that keeping businesses and jobs in deprived areas would be prioritised above the needs of local charities.

"Money that went out in regional funding that might have reached your charity is much less likely to," he said. "Even if it goes to, for example, south Wales, it is much more likely to be ‘please company A, stay in south Wales and don’t move to Germany, and here’s some money to help you stay’.

"Even if money goes to areas that it went to before, it is much less likely to reach charities. If you have lots of EU funding, it is unlikely to be around."

Shrubsole said charities should be aware of other economic effects of Brexit, such as a weak pound and higher inflation, and parliament would have little time for any legislation other than that related to Brexit for the next few years.

Brendan Costelloe, senior external relations officer (EU) at the NCVO, said that charities would have to get used to less-secure funding, with the Treasury distributing funding on an annual basis, rather than for five years like the EU.

"Charities will have to do more to demonstrate the value of that funding and the impact they have through spending that money," he said. "I think that’s something that organisations will have to prepare to do."

Shrubsole added: "Funding programmes and the money that might be in the pot might be revised at every Budget. Charities will really have to demonstrate the value of their programmes going forward, and get much better at monitoring the impact and being able to express that it is money well spent."

Peter Reeve, head of human resources at the MND Association and head of the Charities HR Network, said that charities would have to pay attention to employment law and rights post-Brexit, especially issues such agency work rules or the European Working Time Directive, which the UK government was not supportive of when it was introduced.

This meant that charities would have to keep an eye on what changed in employment law once Brexit had been finalised, Reeve said.

He said: "What capability do you have within your organisations? Who is monitoring what is happening in employment law? And who is talking to the board about what that is likely to mean for the organisation?

"Someone needs to be scanning, because there are parts of employment law that the UK does not like and which might change, and change quite quickly."

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