We were excited to see our clients INEOS Team UK in the news recently as they officially named their race boat for next year’s America’s Cup.…
In the first blog of this short series, Nick Tippett summarised the cost of some of the measures instigated by the UK Government in response to the disruption caused by Covid-19. So, to summarise these still further, up to 5 July 2020:
- Total direct fiscal support (i.e. non repayable) was £158.7bn
- Total tax deferrals and approved loan schemes was £122.8bn
(As a reminder the above figures were sourced from Policy Paper: A Plan for Jobs published 8 July 2020).
Now, if all tax deferrals and approved loan scheme advances were repaid, there would be no additional cost to the Exchequer for these measures (beyond the covering of one year’s interest etc on Coronavirus Loan Schemes). However, given some statements by commentators say 50% of the Bounce Back Loan Scheme debt could go “bad” – it would seem reasonable to assume that some of the cost of these (government guaranteed) measures is also going to have been funded from the public purse. So, even ignoring the cost of subsequent measures the cost to the public finances is say 20% (additional) of the annual budget for Public Sector spending in 2020/21.
In this piece I am not going look at the impact on future UK budgets (tax regime etc.) but rather the ability / appetite of the UK government to make further grant sums available to businesses; starting with UK Shared Prosperity Fund.
I will also be looking at the apparent “route map” for allocations of grant funding and the importance of the LEPs. This is an area my colleagues and I are continuing to look at in much detail over the next two months – see further below.
Innovation funding has arguably never been more important as we try to innovate new ways of doing (business) with the continued disruption caused by Covid-19. It should not be surprising therefore that the UK Government has invested/ accelerated investment into Innovate UK programmes. Currently open competitions can be found at link. (For more background on Innovate UK and innovation funding in general please check out the Innovation section in our Finance 2020 event – it has proved popular viewing!)
UK Shared Prosperity Fund
Just in case you have forgotten, the UK Shared Prosperity Fund is the much touted replacement for European Structural and Investment (“ESI”) funds once the UK has left the EU. In the most recent tranche of ESI funding the UK is set to receive an average of €2.3 billion per year in ESI funding between 2014 and 2020; of which around two-thirds is for general economic development and one-third for agricultural innovation and rural development.
With the UK having formally departed the EU, the country will stop receiving new ESI funding at the end of 2020. But, as yet, we have no details on how the UK Shared Prosperity Fund may look like.
For more information, I would suggest looking at the Institute for Fiscal Studies publication “Sharing prosperity? Options and issues for the UK Shared Prosperity Fund” and The House of Commons Library piece “The UK Shared Prosperity Fund.”
As a firm with clients in some of the geographical areas most supported by ESI monies (and their predecessors) we will be keeping a watchful eye for announcements – but to be honest I will not be surprised if there are no developments this side of 2021; given the strain on the public purse of Covid-19.
LEPs and Growth Hubs as funnels for channelling of further Covid-19 business support measures and funding allocations
Some of you may be aware of Boris’ call to the LEPs for shovel ready projects in mid-June. More of you I suspect are aware of the £900m allocated between the LEPs based on their response to that call – summary and links to projects being supported by LEP area can be found at link. This was not the first time that the LEPs had been asked to bid in for central funds but, maybe not surprisingly, given the nature of the funds being bid for and the short turnaround times, I do not remember a great deal of interaction with the business community specific to this call.
As we have done in the past with ground breaking / big ticket projects, we would recommend that the business community engages with their LEPs at an early stage to see what support may be forthcoming and / or to get the projects on the LEP radar for any further funding calls.
Another group of organisations we are seeing being used as funnels for UK Government business support are the Growth Hubs. The Growth Support Programme and “Kick Starting Tourism Package both appear to be allocated via Growth Hubs.
However, it should be appreciated that neither the LEPs nor the Growth Hubs have the infrastructure to administer grants. Therefore, as with grant programmes allocated to LEP areas in the past other organisations are, it would appear, going to be handling the administration. For example, the Growth Support Programme” in the Heat of South West LEP is being managed by Devon County Council – see link for more details.
PKF Francis Clark
At PKF Francis Clark we have considerable experience in assisting clients with grant applications – with those skills are currently being deployed in assisting a few clients with RDPE Growth Programme and Innovate UK applications.
At the moment, though, what we also are striving to do on the grant funds is collate our understanding of the (fragmented) grant funding landscape so that we may direct clients and potential clients making enquiries of us to potential sources of grant funding (if applicable). In this context we are recognising that in addition to the funds explicitly mentioned above there are a number of other funding and business support initiatives being administered in each LEP area. Therefore we have expanded the team here looking to understand what is on offer per LEP area. The results of our research will form the basis of our October Funding News.
We are also looking to see where we can work with the LEPs and the Growth Hubs and organisations managing funds allocated to each LEP area to see how we can complement them in the delivery of business support to the benefit of our clients and the wider business communities.
Any questions of the above please do not hesitate to contact me in the first instance.