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Philip Hammond’s statement on guarantees for EU expenditure until 2020: Farmers versus the rest

The promise of Philip Hammond, the UK Finance Minister, to honour EU expenditure in the UK until 2020 is only partly reassuring – at least those already in receipt of funds will now know that the rug will not be pulled from beneath their feet.

Mr Hammond used the cut-off point of 2020 because the end of that year marks the expiry of the current Multiannual Financial Framework of the European Union, which was agreed for the years 2014 to 2020, and allowed for long-term spending decisions to be made. At the end of 2013, the Conservative-LibDem coalition government had agreed to this package, so to guarantee a replacement of EU expenditure in the UK until 2020 is merely to honour David Cameron's previous commitment.

Beyond the year 2020, nothing is guaranteed. Mr Hammond undertook to honour projects which are already financed by the time of the autumn statement this December. In other words, farmers whose payments were contractually pre-allocated in 2013 can rest assured until 2020, whereas research or regional development bids currently in preparation but not yet awarded will not have their funds guaranteed. British scientists involved in international cooperation would have appreciated an unconditional guarantee by the British Treasury to honour any funding yet to be committed between now and 2020. Not having this guarantee puts British participation in such projects in jeopardy since a successful bid would run the risk of part of its funding being cancelled at the moment that the UK leaves the European Union.

From Mr Hammond’s words, it is also unclear whether the Treasury will honour all payments beyond 2020 for projects that already exist. Whereas farming payments are automatic ("non-differentiated" and "pre-allocated" in EU jargon), other EU expenditure is divided into what are called commitments and payments. Commitments are virtual money that the EU promises to deliver when an award is made. Payments are the cash paid as a recipient complies with the conditions of the award, secures co-financing and produces necessary paperwork. Typically payments can follow up to three years after commitments and are most common in areas like regional development and research once projects get off the ground.

Farmers’ incomes in the current system are indeed guaranteed until 2020. What researchers and the UK’s most needy regions like Cornwall and the Welsh Valleys have a right to know is whether all payments due in the UK under the EU’s current spending programme of 2014 to 2020 will be honoured.

 

 

Giacomo Benedetto

Jean Monnet Chair in European Union Budget Policy

Royal Holloway

University of London

 

 

Posted on Saturday, August 13, 2016 at 07:34PM by Registered CommenterDr Giacomo Benedetto | CommentsPost a Comment

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