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FSB: Brexit Funding Gap a Threat to Growth and Productivity

Millions of pounds in EU funding dedicated to supporting small firms in Wales must be replaced to avoid the risk of an economic slowdown post-Brexit, according to the latest Federation of Small Businesses (FSB) report.


In recent funding rounds, the devolved governments of the UK have received some of the highest allocations of ESIF (European Structural and Investment Funds). Wales receives five times more in per capita terms than England does. This has consequently provided a vital part of regional policy in helping local economies and businesses across Wales. Given the importance of this funding to Wales, it is FSB Wales’ view that we retain a similar funding distribution to that received in previous rounds.


As a net contributor to existing EU budgets, the UK should eventually receive a budgetary dividend once we leave the EU. We therefore believe that the UK Government should, at the very least, aspire to maintain the level of funding currently on offer to support small businesses.


The new report: ‘Reformed Business Funding: What small firms want from Brexit’ found that the majority of businesses in Wales that have used EU funded schemes, believe EU funding has had a positive impact on their business (68%) and local area (68%). The research indicates that the benefits of EU funding are even broader, with many other businesses indirectly gaining from wider economic growth.

The research uncovers a clear relationship between the likelihood of applying for business support and growth ambitions among small firms across the UK. Those looking to grow by 20 per cent or more (89%) are far more likely to apply for support than those that aspire to remain the same size (65%).


Successful applicants for EU-funded schemes in Wales express various frustrations with the application process. The most common being the amount of information required to make an application (76%), the length of the application process (38%) and the need to meet excessive reporting requirements after funds are granted (23%). As a result, FSB Wales proposes a reduction in bureaucracy as part of a reformed business support landscape.


Janet Jones, FSB Wales Policy Unit Chair, said:


“This research demonstrates how vital it is for funding for Wales to be protected post-Brexit, and for the Welsh Government to have oversight of this.


“However, there are opportunities to do this differently, with member businesses in Wales wanting to see spend concentrated on things such as transport infrastructure (20%), extended tax relief for small businesses (21%) and business support (20%).


“Should EU funding fail to be replaced in 2020 then it is clear that as a net beneficiary, Wales will be worse off than much of the UK as a result. We are clear that this funding must be protected to ensure the continuity of business support. However, we need a new conversation with businesses to reinforce the benefit of this funding and bring them closer to what is an important public investment. Brexit offers the opportunity to improve upon how and where we use this money. We have called on the next UK Government to ensure that it is replaced and will take forward a conversation with Welsh Government as to how it is used.”


Tony Sage, of Safety Sage Ltd, a small business that has been in receipt of EU funding, said: “The React 2 funding allowed me to broaden my skill base in a way that I wouldn’t have been able to otherwise. The Level 3 teaching qualification (EAT) has indeed enhanced my training courses that I deliver. It has opened other doors too; such as the fact that others have approached me to deliver training knowing I have this EAT qualification. The 3rd course I was able to attend was Behavioural Safety, a key course that I apply in training and consulting. This is now the recommended approach form the HSE to use interpersonal understanding of safety to help businesses.”


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