What will happen to grant funding after Brexit?
As uncertainty over ‘Brexit: Deal or No Deal’ continues amid the stop and start negotiations between the UK Government and the EU, many innovation-focused businesses here will be feeling a growing sense of anxiety about the future of grant funding programmes.
At present there are a range of available grants to help UK businesses accelerate the ambition and vision of their product or services portfolio including the EU’s Horizon programme.
Horizon 2020 (H2020), the current EU Framework Programme for Research and Innovation, is the largest to date and has been supported by nearly €80 billion of funding since its launch in 2014. It focuses on science, industrial leadership and societal challenges, with specific allocations of funding in each area.
At the end of the year H2020 will be succeeded by Horizon Europe, a programme supported by a further €80 billion which will go into effect until 2027.
H2020 has been one of the key mechanisms in providing crucial funding for innovative EU companies, including those in the UK. If, however, a Brexit deal fails to materialise before the UK’s departure at the end of the year, British business will very likely need to look elsewhere for support. With a No Deal Brexit seeming highly possible at this moment in time, the big question is what could and should the UK Government put in place as an effective replacement to the current EU grant funding stream?
H2020 was primarily focused on SMEs employing under 250 people. To achieve impact and support the growth of these businesses, a new UK grant scheme would need to continue to focus on the novelty and/or uniqueness of any new technological developments; the wider impact of an innovation project in terms of jobs creation, its potential to generate growth, and its potential benefits to the environment and society.
Existing UK grant funding schemes, including Innovate UK, may be called upon to pick up any slack should a No Deal force our withdrawal from the Horizon programme. A further option is for regional bodies, which include Local Enterprise Partnerships (LEPs) in England, Scottish Enterprise, the Welsh Development Agency, and Invest Northern Ireland to be given funds and autonomy to provide grants to support innovative companies within their local areas. This could be an effective means of stimulating inward investment in less advantaged areas helping address the wealth gap in many regions across the UK.
Another new grant funding option could come via the UK Government’s ‘blue skies’ science and research agency, part of a series of pro-business measures designed to boost Britain’s competitive edge. Earlier this year an additional £800m of public funds was been pledged for this initiative, modelled on the USA’s Advanced Research Projects Agency (ARPA), to fund ‘high-risk, high reward science.’ The agency is part of plans to nearly double public investment in research and development to £22 billion per year by 2025 to help Britain become a world leading science and research centre.
To fulfilling this vision, the UK Government will need to ensure it is imaginative in how it supports and incentivises business innovation.
This will include embracing elements of other effective grant funding programmes from other parts of the globe such as Canada’s CanExport initiative. This programme provides grants to support Canadian companies with export marketing projects including participation in trade shows and government-led trade missions. By providing this additional funding for marketing-related activities – something neither UK or EU grants cover – innovative small and mid-sized Canadian businesses employing up to 500 people are able to de-risk export market evaluation and development costs and pursue international growth opportunities.
While Covid-19 has put a stop on approving any trade travel applications at the moment, the programme has helped up to 1,000 businesses every year by supporting new export marketing strategies. CanExport offers an excellent example of a grant programme that could give UK companies a similar competitive edge.
It’s worth remembering it was the Canadian Government which pioneered R&D tax relief, an initiative which was successfully replicated in the UK. Since it was launched here in 2000, British businesses have been strongly incentivised to invest in research and development projects aimed at enhancing competitiveness and making them world class.
We continue to hope for a successful outcome from the Brexit negotiations and for clarity on many core issues including grant funding arrangements. In the meantime we need to ensure we have a formidable Plan B in place.
The Prime Minister has often stated his preference for a Canadian-style trade arrangement with the EU going forward. If they are however unable to secure a deal which would keep the UK within the Horizon programme, he would do well to look to Canada’s model in devising alternative grant funding arrangements to ensure businesses are able to thrive post-Brexit.
Joe Matusiak, Grants Manager at innovation funding specialists ABGI UK