It’s easy to feel lost amidst all the uncertainties around Brexit, so let’s look at what the future holds for social entrepreneurs and other organisations interested in EU funding.

Whether or not you have voted for Brexit, hopefully you’ll agree that it’s important to ensure that the EU structural funding that UK communities received to tackle disparities and support economic development continues in some form. You might even argue that there were a number of flaws in how this funding was administered and distributed, and that Brexit presents an opportunity to improve funding structures.

First let’s look at what the current EU structural funding:

The EU spends €2.4 billion a year in structural funds on the UK, which is used for boosting several aspects of economic development, including support for businesses, employment and agriculture, and is administered by the different nations of the UK.[1]

Whilst some people feel that this funding could have been administered and distributed in a more effective way, there are a number of positive examples where EU funding enabled social entrepreneurs to create a bigger social impact on their communities.

“UnLtd Award Winner LatchAid is an easy-to-use 3D app which utilises the state-of-art Computer Graphics technologies to help mums and mums-to-be to visually learn and improve their latching on skills in the comfort of their own environment after or even before giving birth. It also helps them to connect with each other and with breastfeeding professionals for invaluable peer-to-peer and professional support anywhere and anytime. 

They received match funding from the EU regional development fund, that was instrumental in getting access to 1-to-1 support from healthcare business experts and in product development with app designers, developers, 3D artists, and lactation consultants towards a minimum viable product and the launch of its first version. The EU funding has also put them in a good position to start approaching private investors for seed funding to help them to continuously grow in the future.

In their experience national funding can be challenging to apply for and found the EU regional funding more accessible during this very critical stage of the business.”

UnLtd Investee Cornwall Marine Network is an organisation dedicated to supporting the Marine sector in Cornwall via initiatives that improve profitability and encourage growth through quality and innovation.

Since 2005, they have won EU funds worth around £20 Million that have enabled them to develop services which help their marine business members to grow. A critical goal for CMN has been to address the skills gap in the marine sector. As a result of their work 3,000 new jobs have been created and nearly half of these have been apprentices into SMEs. In addition, they have supported 687 unemployed people into work.

In February, the European Alliance for Apprenticeships singled out CMN as a best practice in the whole of Europe for supporting SMEs to engage with apprentices and were invited to Brussels to share how their model works.

The economic added value of the CMN Team achievements is estimated at more than £315 Million to Cornwall’s economy.

So what’s happening to this funding?

In the short term, the Government has guaranteed that all EU funding agreed before the UK’s departure will be delivered – even in case of a “no-deal"" exit [2]

In the long term, the Conservative Party announced the creation of a UK Shared Prosperity Fund to replace EU structural funding in their 2017 Manifesto; aiming to reduce inequalities between communities across the four nations. They claim that the EU structural funding is expensive to administer and poorly targeted, and that the UK Shared Prosperity Fund will be cheap to administer, low in bureaucracy and targeted where it is needed most.

The Manifesto has also committed to a consultation on the fund, involving the devolved administrations, local authorities, businesses and public bodies. However, we are two years on and no public consultation has happened. The Government has carried out some stakeholder engagement events to collect views on the design of the Fund – according to a Parliamentary Question [3] in April 2019, there have only been 25 such events so far.

We are disappointed by the delay and the hesitation to involve a wider variety of groups into the design of the new funding. We know that many areas, which benefitted from EU structural funding have voted for Brexit, so there are clearly lessons to be learnt about how funding mechanisms should be improved. These communities’ experience and views would be vital to help the Shared Prosperity Fund achieve its aim of reducing inequality. 

So whilst we wait for the consultation, we had a look at what our evidence tells us on successful funding mechanisms that effectively reduce inequality:

1. Work with social entrepreneurs

Social entrepreneurs often offer radically different solutions to existing ones, based on extensive user involvement or often their own lived experience. They are inclusive, dynamic and rooted in the community – and their business models offer financial sustainability. We would like the Shared Prosperity Fund to actively seek supporting social entrepreneurs, who can be powerful drivers of change in their local communities.

2. More flexible funding arrangements to stimulate social innovation

Social change and innovation are emergent processes – but stringent contract requirements don’t allow for them. The inflexibility of processes, combined with the high reporting requirements, makes it difficult for organisations to be innovative.

Furthermore, smaller community groups do not have time or expertise in filling out detailed application or tracking forms – which means using the same methods would lead to the ‘usual suspects’ applying, meaning the same old organisations benefitting from the funding. Whilst some of them are doing excellent work as demonstrated by the examples above, maintaining the barriers that prevent other groups from accessing this funding means that the whole community loses out on their new ideas and solutions.   

3. Put local people in charge

Arguably one of the drivers of the Brexit vote was how certain communities felt ‘left-behind’ and excluded from decision-making processes. If the Government wants to give power back to the communities, it needs to go a lot further than just moving the decision-making processes to Westminster.

We at UnLtd believe that local people hold the key to regeneration and vitality of their places and communities. This cannot be imported or imposed. The Shared Prosperity Fund should actively and meaningfully involve local people in the decision-making processes.

One way of doing this would be to work with local organisations, that are well-connected and trusted by the whole community – not just certain groups. Too much reliance on LEPs for example might risk missing out on input from those members of the community who don’t traditionally engage with LEPs.

4. Work with intermediaries who have experience in funding place-based change

The Shared Prosperity Fund should seek to work with trusted organisations who have experience in distributing place-based funding. Choosing an experienced grant-maker would help ensure that the money spent is reducing inequalities in a meaningful way.

For example, UnLtd has been running place-based social entrepreneurship programmes with our partners over the last 8 years and we have learnt a lot about what does and what doesn’t work.  You can read about our work here and here. We’d be pleased to share our expertise.

So what next?

There is a Parliamentary debate on the Shared Prosperity Fund scheduled for the 5th September (at the time of writing). Of course, in the current political climate, the debate might not happen, but if it does, we are going to monitor it – so keep an eye on our twitter feed for updates.

If/when the consultation happens, UnLtd will feed into, with our evidence of having supported over 16,000 social entrepreneurs all across the UK.

[1] https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8527

[3] https://www.parliament.uk/written-questions-answers-statements/written-question/commons/2019-04-03/240520