Mordaunt takes a stand against 'discriminatory' Brexit disclaimers

U.K. Secretary of State for International Development Penny Mordaunt. Photo by: Suzanne Plunkett / Chatham House / CC BY-NC-ND

LONDON — The United Kingdom Secretary of State for International Development Penny Mordaunt has taken a hard line against the European Commission’s use of disclaimers in its aid and humanitarian agreements, which say U.K.-based organizations could be suddenly cut off from funding when the U.K. leaves the European Union in March 2019.

Speaking before the International Development Committee, the U.K. aid chief described the disclaimers as discriminatory, and pledged to look into “how we could use the U.K. aid budget to protect U.K. aid organizations.”

“The European Commission is using disclaimers which discriminate against U.K. organizations,” Mordaunt said in the House of Commons on Tuesday. “We are clear that the European Commission must remove these disclaimers it is using to hinder British aid organizations in delivering the common goal of alleviating poverty, which would hit the world’s poorest people hardest.”

Mordaunt added that in her communication with the EC, she has been “very clear that if we are contributing ... U.K. funds to EU projects, then U.K. NGOs must have access.”

“We have raised the issue with the commission multiple times,” she said, adding that she and her team are “shocked and disappointed in their behavior,” which “does not set a good precedent for any future partnership.”

Since earlier in the year, the European Commission has been including disclaimers in its calls for proposals for aid projects that warn U.K.-based organizations about the possible impact of Brexit on its contracts.

For calls through DEVCO, the commission’s development arm, the disclaimer states that if negotiations around access are not concluded by the deadline, “the rules of access to EU procurement procedures of economic operators established in third countries will apply to candidates or tenderers from the United Kingdom depending on the outcome of negotiations. In case such access is not provided by legal provisions in force at the time of contract award, candidates or tenderers from the United Kingdom could be rejected from the procurement procedure.”

For contracts through ECHO, the Commission’s humanitarian arm, which works with organizations through Framework Partnership Agreements, the EU has stated that: “Specifically, for U.K.-based partners the FPA will cease to have any effect on the date on which the United Kingdom withdraws from the European Union, save where arrangements have been concluded in due time between the United Kingdom and the European Union allowing a different approach.”

Mordaunt claimed that disclaimers are also being issued in calls for proposals to EU trust funds, which sit outside of the official EU budget and are contributed to on a voluntary basis. The trust funds have until now been touted as a promising route for the U.K. to continue contributing as a third country.

“The Commission is not only applying these disclaimers to the funding we channel through the EU budget, over which we do not yet have discretion; they are also applying them to funding that we have chosen to channel through the EU as our preferred delivery partner, such as trust funds and other joint programs,” Mordaunt said.

“We are now looking at how we can use the U.K. aid budget to protect U.K. organizations from this discriminatory practice,” she said.

In 2016, about 25 percent of ECHO funding to civil society groups was granted to U.K.-based organizations, according to a report by Bond. Johannes Trimmel, president of CONCORD, a confederation of European aid NGOs, explained this could mean a significant gap in capacity to deliver on its commitments if the EC follows through on disclaimers.

“It is, and will definitely not be, fair to pass on the risk of failed negotiations to development NGOs who work together across Europe and beyond to support people facing poverty, social exclusion, injustice, and war,” Trimmel told Devex.

U.K. aid organizations also face serious implications for their current funding portfolios. “As of June 2018, ECHO have not provided further detail, or reassurance, on the next steps for FPA extensions, and whether U.K. CSOs [civil society organizations] will be granted extensions, pending the final terms of U.K. withdrawal from the EU,” Trimmel said, adding that ECHO funding makes up about 59 percent of EU funding to U.K. CSOs.

An EU source told Devex the disclaimers were intended as a general, precautionary measure aimed at warning U.K. entities about the possible consequences of a "no-deal" scenario; and to ensure that U.K. entities carefully analyze their own situation, in accordance with the legal basis of the program, before entering into a contract.

The source also confirmed that for programs in least developed countries and heavily indebted poor countries, entities from the Organization for Economic Co-operation and Development countries including the U.K. will remain eligible for funding after Brexit.

Mordaunt argued that the disclaimers amount to “threats,” and claimed the Department for International Development has “clear evidence that I think we can share with the committee on where British NGOs and companies are being blatantly discriminated against,” she said.

“That cannot continue,” she added. “We want to protect not just British business and British NGOs; we want to protect the people who are the recipients of that aid delivery, and I would urge everyone at the commission to desist from these disclaimers and the discrimination that’s going on.”

Vince Chadwick contributed reporting to this story from Brussels.

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    Molly Anders

    Molly Anders is a U.K. Correspondent for Devex. Based in London, she reports on development finance trends with a focus on British and European institutions. She is especially interested in evidence-based development and women’s economic empowerment, as well as innovative financing for the protection of migrants and refugees. Molly is a former Fulbright Scholar and studied Arabic in Syria, Jordan, Egypt and Morocco.