No-deal Brexit: UK government will underwrite ejected aid contracts

British and European Union flags in front of the Berlaymont building, headquarters of the European Commission. Photo by: European Union

LONDON — The government of the United Kingdom has announced it will “provide financial assurance” for U.K. NGOs ejected from European Union funding in the event of a “no-deal Brexit,” according to documents released Thursday.

The news comes after the EU introduced disclaimers in new aid contracts earlier this year stating that U.K. organizations could suddenly lose funding when the U.K. exits the EU in March 2019, if negotiations have failed to secure a deal by that time.

“To facilitate continued applications by UK organisations to the EU’s humanitarian arm, ECHO, and to avoid early termination of programs, the government has now committed to funding the post-March 2019 outputs of any program funded from ECHO’s core budget, where a UK organisation is the lead consortium partner or sole implementer,” according to one of 25 documents released by the U.K. government’s Department for Exiting the European Union.

“This will apply only in a no deal scenario when ECHO terminates funding based on the clause quoted above at the time of the UK’s exit from the European Union,” it says.

But the notice also sets out a number of exceptions and criteria for eligibility. Only “new applications for ECHO funding between the date of this notice and 29 March 2019” will be eligible for U.K. assistance under the commitment. In addition, only U.K. organizations who are the sole implementer, the lead implementer in consortia, or subcontractors under U.K.-led consortia are eligible.

Non-U.K.-based subcontractors are not eligible for assistance, raising questions about where this would leave local subcontractors. The U.K. has previously committed to increasing humanitarian funding to local organizations as part of the “Grand Bargain.”

Among other requirements, eligible organizations must must have “successfully undergone DFID [Department for International Development] due diligence and must comply with all standard DFID Accountable Grant clauses.”

The announcement does not mention contracts with the EU’s development arm, DEVCO, which has also been including disclaimers.

Claire Godfrey, head of policy and campaigns at Bond, the U.K. network of development NGOs, said the new commitment offers “much-needed reassurance to U.K. NGOs so they can continue to bid for EU funding without fearing cuts before a program has ended — the impact of which would have been borne by the world’s poorest and most vulnerable people.”

“Humanitarian aid should never have become a Brexit negotiating tool,” she said, adding that using disclaimer clauses in NGO contracts “unnecessarily discouraged U.K. NGOs with sought-after expertise from applying for funds,” she said, adding, “we sadly risk hindering joint global development and aid efforts unless people stop playing politics with the lives of those facing dire poverty, insecurity, and climate change.”

The no-deal Brexit disclaimer currently being used in all EU ECHO contracts states: “For British applicants (non-governmental organisations): Please be aware that you must comply with the requirement of establishment in an EU member state for the entire duration of the grants awarded under this Humanitarian Implementation Plan (HIP). If the United Kingdom withdraws from the EU during the grant period without concluding an agreement with the EU ensuring in particular that British applicants continue to be eligible, you will cease to receive EU funding or be required to leave the project on the basis of Article 15 of the grant agreement.”

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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.