What is the current level of EU funding that comes into the UK? Of the £18 billion we sent to the EU in 2015, we received a £5 million rebate and around £4.5 billion in EU grants, subsidies and private sector spending. The major ones are the European Social and Investment Fund (ESIF) – consisting of the European Regional Development Fund (ERDF) and European Social Fund (ESF); and the research and innovation programme Horizon 2020. For perspective, Greater Manchester has been allocated funds of £356 million for 2014-2020 from the ESIF, with many projects such as the National Graphene Institute (£23m), NOMA (£6.9m) and the Sharp Project (£7m) all receiving EU grants.
If we exit will the UK lose all EU funding? Again we face the issue of not knowing for certain what arrangements will be in place should we leave the EU. If we take the example of Norway and assume we will take the EEA/EFTA option, then in all likelihood we shouldn’t lose as much funding as is generally being reported.
[EDIT 24/05/16] Original line: In fact, all countries within the EU-28, EEA, EFTA and all EU candidate and pre-candidate countries are eligible to bid for funding from the ESIF, and go through exactly the same process the UK does. This is not as clear cut as it first appeared. Certain parts of the ESIF are available to EEA/EFTA members, but nothing in comparison to the ERDF/ESF regional funding we get in the UK. The function of pooling and allocating regional development funds would probably fall to the UK government in the event of an exit. For example, Norway has a National Development Bank which carries out this function.[EDIT ENDS]
Furthermore, contrary to common claims we would not lose our access to EU science, research and innovation funding. Non-EU countries like Norway and Israel have full participation in EU programmes such as Horizon 2020 and Framework 7.
As EEA/EFTA members, we would not be required to take part in EU funding streams such as the Common Agricultural and Common fisheries policies, although we could likely remain party to these agreements if desired. These policies provide subsidies to UK farming and fishing, but the supposed market-distorting impacts of these policies are strongly opposed by some, and in monetary terms they are net losses to the UK economy. Total agriculture spending makes up over 47% of the EU’s budget at a cost of €54 billion. Potentially, the UK government could match the subsidies and still be better off financially. This is a strong point for many leavers, but there is a chance we would push to remain party to the arrangements to avoid extra administrative burden and uncertainty. In other words, we will lose this funding if choose to.
Understanding what happens under other arrangements is much more difficult, especially if we avoid EEA/EFTA altogether. In this situation there is the potential that we lose our access to current funding streams, at least until new arrangements are made. With our close proximity and integration with the EU though, it is hard to imagine we would be totally cut out from funding eligibility, especially when countries as far as Israel can take part.
It must also be pointed out that we are the second largest net contributor to the EU budget behind Germany. In many respects the government may end up with more money to spend than we receive in EU grants if we stopped contributing to the EU’s shared pot, although this would obviously entail an enormous administrative effort and would stir up uncertainty and funding inconsistency. Still, we should expect to pay to retain access to the single market, and whether any extra money will be put to better use by the UK government rather than the EU is another matter altogether.