Hundreds of voluntary organisations have been forced to shut up shop or scale back their operations because of government delays in replacing EU funding, the Guardian has learned, as the consequences of Brexit continue to ripple out across the UK.
Three years after Boris Johnson was swept to power promising to “get Brexit done”, a Guardian reporting project finds employers, farmers and charities are still wrestling with the reality of life outside the EU.
A new analysis of government funding intended to replace EU support, shows multimillion-pound gaps in funding for farming and economic development.
The Wales Council of Voluntary Action (WCVA), a national umbrella organisation involving many charities that relied on the money from the European social fund to pay wages, is among those that revealed little-known new Brexit problems.
The government announced exact allocations of the UK Shared Prosperity Fund (SPF) in December to replace the £11bn EU economic and regional development fund (ERDF) and European social fund.
But by that time it was too late for “hundreds of organisations”, said Matthew Brown, director of operations at the WCVA.
“We’re all having to lay off staff because the UK SPF has not come in on time,” he added.
Wales economy minister and Labour Senedd member Vaughan Gething claims Westminster’s carve-up of replacement funds has left Wales with £772m less in ERDF and ESF funds, a figure denied by the government. “The entire approach to the Shared Prosperity Fund has been chaotic,” he said.
Scotland also claims it is worse off through the replacement funding. Employment minister Richard Lochhead said: “The UK government’s Shared Prosperity Fund fails to deliver replacement funding which was promised to Scotland, meaning communities across the country will miss out on around £337m of investment from 2022-25.”
Meanwhile, many exporters remain exasperated at the barriers to trade with the EU bloc, including customs checks and additional bureaucracy; while industries previously heavily dependent on low-skilled EU labour, including hospitality and food production, grapple with staff shortages.
Employers claim that while the new skilled worker visa scheme at the heart of the government’s “points-based” immigration system covers a wider range of jobs than in the past, it is bureaucratic and costly to administer.
“It costs a lot of money to become a sponsor and to get a visa through: almost every company would need a professional adviser to do it. It’s incredibly difficult,” said Neil Carberry, chief executive of the Recruitment and Employment Confederation.
The chief executive of the British Meat Processors Association, Nick Allen, said it was costing £12,000 a worker, in visa costs, transport and accommodation, to bring in butchers from the Philippines to fill jobs that would once have been done by EU workers.
“I don’t think anyone believes we’ll ever be able to fill all those roles with British-sourced labour,” said Allen, whose industry relied on 65% non-UK staff before Brexit.
Bringing in low-skilled workers from overseas has become all but impossible under the new system. Kate Nicholls, chief executive of UK Hospitality, said: “That’s where we’ve got the most difficulties – you can recruit an executive chef but if you don’t have a kitchen porter, the kitchen can’t open. If you don’t have housekeeping, the hotels can’t open: those basic skills are needed.” Ministers have encouraged firms to look closer to home for staff.
While many big businesses have become accustomed to surmounting the new trade barriers to the EU, small exporters describe being buffeted by inconsistent customs and VAT processes.
“It really annoys companies, having to go through these extra costs,” said William Bain, head of trade policy at the British Chambers of Commerce.
He called on the government to resolve the impasse over the Northern Ireland protocol to smooth the way to a better working relationship on other issues.
“Clearly, until there is stability, much less a resolution on that, we are not going to see any of the improvements and the easements that would make the life of small businesses a lot easier,” he said.
A cross-industry veterinary and environmental health group, the Sanitary and Phytosanitary Certification Working Group, estimated that the new requirement for export health certificates, signed off by a vet, added £60m to the cost of food exports to Europe in 2021.
A government spokesperson said England, Scotland, Wales and Northern Ireland “are all receiving at least as much as they did before” from the new UK shared prosperity fund “while also being free from bureaucratic EU processes and having greater say in how the money is used”.
A Defra spokesperson said it was committed to maintaining the annual farming budget to the same level as the EU, with reductions in farm subsidies in England being reinvested into the sector.
They added that the common agricultural policy “did nothing to improve food production or food security and gave half the budget to the largest 10% of landowners. We are designing our new schemes in partnership with farmers to support the choices that they make for their holdings.”
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