Hundreds of EU business support schemes to be wound up

The Department for Levelling Up, Housing and Communities said that “with so many closures” planned this year it wanted the private sector operators to get their paperwork in order, as any final payments would be withheld if its reporting requirements were not met. “With a fixed and tight deadline set by the [European] Commission for programme closure, we ask that you are prepared and plan well in advance so that you can meet all closure reporting requirements in good time,” it stated.

The move means that most EU-funded advice and grant support schemes that are still open will close to new applicants by March, support organisations said. They have urged companies to apply for the support soon or miss out.

For instance, small and mid-sized businesses in Teesside were encouraged this week to apply for free training under a Skills Support for the Workforce initiative before it closes in March. Since 2019 1,500 businesses have done so, benefiting 4,500 employees.

Four schemes operated by Oxford Innovation Advice, used by more than 2,000 businesses a year in Cornwall, Yorkshire and Humber and the Midlands and backed by £50 million in funding, will also wind down by the end of March.

The department said that the new fund would improve on the EU scheme because it would be more focused on UK priorities

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Other smaller schemes, such as Aston University’s Low Carbon SMEs support programme, which has helped 165 companies in the West Midlands to reduce their carbon footprint, are closing next month. Professor Prasanta Dey, its project lead, said he was unaware of any UK funding that would replace it. “There is nothing happening now,” he said.

Setting up the government’s £2.6 billion UK Shared Prosperity Fund (UKSPF), which aims to replace the EU funding to support skills training, community initiatives and businesses, is taking longer than expected. Funding decisions in England have shifted from the 38 Local Enterprise Partnerships to combined authorities, unitary, county and district councils, each receiving between £144 million (in London) and £1 million to spend by 2025.

They have been drawing up plans but initial expectations that they would begin commissioning new initiatives last autumn proved overly optimistic. It is now likely to start between April and July, although the Greater London Authority has put out a call for proposals worth £30 million that it wants in by February 13.

Funding for support in Scotland, Wales and Northern Ireland is being delivered centrally or via regional or city economic growth partnerships or local authorities. The Treasury revealed in the autumn statement that it expects only £600 million of the UKSPF to be allocated to initiatives in the 12 months to March 2024 and £1.3 billion to be allocated the following year.

Jane Galsworthy, managing director of Oxford Innovation Advice, said. “It’s quite difficult to say how long it’s going to take places to commission [new programmes] because we have not really seen any tenders come up.”

She is concerned about losing experienced business advisers as EU-funded schemes close and there is a gap before the hundreds of local UK schemes start again. “The [funding] landscape is now relatively fragmented,” she added. “The postcode of your business will become even more important.”

The Growth Company runs a growth hub in Greater Manchester and is one of the country’s largest support centres, engaging 42,000 businesses since 2018 and employing 100 staff. Mark Hughes, its chief executive, has one eye on the gap in funding for skills training, with EU funding ending by June and the UKSPF monies not released until April 2024. “You would be a brave person to say there will be smooth transition,” he said. He is also concerned about the shift from up to seven-year funding periods under the EU schemes to less than two years under the UKSPF.

Be the Business, a leadership support organisation, said the closure of EU-funded schemes came at a time when more business owners wanted to invest in their capabilities. “Many like the idea that more of the spending will be decided on locally, but are worried about gaps in provision while we wait for new support to come on-line,” James Gribben, head of communications, said.

“The programmes which are in the process of winding down will have spent years building profile in their local communities, so there will be an immediate challenge for new support programmes to find their audience.”

A spokeswoman for the Department for Levelling Up, Housing and Communities said the UKSPF “will at least match previous EU funds”, reaching “around £1.5 billion a year when EU funding comes to an end, providing for a smooth transition”.

She added that it would “improve on EU structural funds by focusing on UK priorities rather than policies dictated by the EU, giving local areas a greater say in investments, and cutting burdensome EU bureaucracy”.

The concerns come as the Department for Business, Energy and Industrial Strategy said this week that since Brexit it had introduced “the most significant changes” for more than 40 years in the way that subsidies offered to businesses are managed.

It said that subsidies would now be “tailored to local needs”, with public authorities and devolved administrations having “added flexibility” to help them to act quickly and better target the support.

It is working on three schemes covering “research, development and innovation, energy usage and local growth” where it will set criteria so that payments can be made without the need for Whitehall sign-off.

Kevin Hollinrake, the business minister, said: “New rules mean UK authorities will be free to deliver money to businesses in a quicker, fairer and simpler way, without long-winded and unnecessary approval processes to bog us down.”