EU-UK Trade and Cooperation Agreement Clears Path to Horizon Europe

On 24 December 2020, over four years of stop-start, often fractious negotiations between the United Kingdom and European Union finally ended with a deal. But what does the EU-UK Trade and Cooperation Agreement mean for EU funding programmes as we enter the 2021-2027 programming period?

Agreement Secures UK Access to EU Funding on Third Country Terms

The EU-UK Trade and Cooperation Agreement covers the following areas: trade in goods and in services, digital trade, intellectual property, public procurement, aviation and road transport, energy, fisheries, social security coordination, law enforcement and judicial cooperation in criminal matters, thematic cooperation, and participation in Union programmes.

Both parties agreed to adhere to the existing legal framework for the participation of third countries in EU programmes. As a non-EU ‘third country’, the UK will be able to take part in EU programmes based on a series of conditions set out in the basic EU acts that establish each programme, as well as in the relevant rules of the Multiannual Financial Framework 2021-2027.

The Agreement also confirms that in order to participate and access funding, the UK will have to commit to the full 2021-2027 programme period, in principle securing UK access to EU funding for the next seven years.

UK Retains Access to Horizon Europe for 2021-2027

The EU and UK have agreed to UK participation in the following programmes:

Horizon Europe.

The Euratom Research and Training programme.

International Thermonuclear Experimental Reactor (ITER).

The EU’s ‘Copernicus’ satellite system.

The EU and the UK have also jointly committed to continue the implementation of PEACE+, the EU’s cross-border programme for a more prosperous and stable society in Northern Ireland and the Border Region of Ireland. PEACE+ is not included in the Agreement because it is managed under ‘shared management’, where Member States and associated countries actively manage the programme together with the European Commission.

From a research perspective, a pathway for the UK to participate in Horizon Europe is the key element of the Agreement. Access to the EU’s 2021-2027 €95.5 billion research programme will be welcomed by a sector that has endured disruption and uncertainty since 2016.

While the UK has secured around €5.9 billion in funding from Horizon 2020, according to June 2019 figures (13.5% of the total, second only to Germany), its annual share of EU research funding has fallen by nearly a third since 2015, according to the Royal Society.

Adrian Smith, President of the Royal Society, cautiously welcomed the Agreement, saying:

‘Now that we have a Brexit deal, we look forward to seeing the details of arrangements to ensure the closest possible scientific cooperation. Scientific progress thrives on collaboration and we have to make that as seamless as possible.

‘The focus must now be on ensuring a fair and effective means to deliver appropriate association to EU science funding programmes, such as Horizon Europe, outlined in the agreement. Any delay in delivering such association will damage UK science and, in the event of any delay, the Government must take quick action to protect and stabilise the world class asset that is our science base.’

Because the main purpose of the Agreement is to create a legal framework for the new relationship between both parties, the UK will still need to negotiate a further deal with the EU to formally join each programme for the 2021-2027 period.

Both sides have also agreed to an ’emergency brake’ mechanism. The UK can exit an EU programme with 45 days’ notice if the conditions for participation substantially change, the country’s financial contribution increases by 15% or they are excluded from more than 10% of the programme.

If the UK fails to pay its financial contribution, or the conditions that existed when the UK entered change substantially, the EU can suspend UK participation with 45 days’ notice. If the EU has not lifted the suspension and the situation has not been resolved after a year, then the UK’s participation in the relevant EU programme will be terminated.

UK Exits Several EU Programmes Despite Deal

While UK participation in Horizon Europe provides a boost to the international research community, UK organisations will no longer have access to several other high-profile EU funding schemes only available to Member States or fully associated countries.

The UK will not participate in any INTERREG programmes in the 2021-2027 programming period. This will not affect ongoing and already-funded projects. The 2018 Withdrawal Agreement between the UK and EU ensures that UK beneficiaries will still be able to participate in ongoing projects from the 2014-2020 programme until they end.

UK regions will not be able to access European Structural and Investment Funds (ESIF) programmes in 2021-2027. However, European Regional Development Fund (ERDF) and European Social Fund (ESF) project funding issued under the 2013-2020 ESIF programme is also guaranteed by the 2018 Withdrawal Agreement. UK grant recipients will continue to receive previously allocated funding until the end of their projects.

UK-based companies will not be allowed to compete for new financing in the European Innovation Council’s (EIC) Accelerator Fund, EIC equity funding and the European Investment Banks’s other innovation funding instruments.

UK Quits Erasmus, Announces Turing Scheme

At the beginning of negotiations, the UK sought to continue participation in the Erasmus student exchange programme, but on a partial basis with a reduced financial contribution. As the basic act establishing Erasmus+ requires third countries to fully participate in the programme, this was unacceptable to the EU, and the UK opted not to take part in Erasmus for the 2021-2027 period.

Students at universities in Northern Ireland will still be eligible to participate in the scheme under an arrangement with the Irish Government, at a cost of about €2.1 million a year. Funding is expected to be available to all full-time students attending third level institutions and will not be limited to those with an Irish passport, meaning British passport holders will also qualify.

The UK Government has announced that a replacement ‘Turing Scheme’ will provide over £100 million for around 35,000 UK students in universities, colleges and schools to go on overseas placements and exchanges from September 2021. Successful applications will receive funding for administering the scheme and students taking part will receive grants to help them with the costs of their international experience.

However, the UK Government has so far only committed to funding ‘outward’ student mobility, with no reference to tuition fees, travel costs to the UK or staff exchanges, meaning universities may have to negotiate fee waivers themselves.

As a result, reaction to the announcement has been mixed. ‘It’s not like the UK is leaving one kind of bloc and joining another,’ said Paul James Cardwell, Professor of Law at the University of Strathclyde. ‘There’s nothing so far with the Turing system apart from funding for some students. It [the UK Government] says 35,000. I don’t know if that’s going to be realistic or not, if it will actually be something that is a real replacement.’

Kostis Giannidis, President of the Erasmus Student Network, said:

‘It remains to be seen whether Turing offers better funding for UK students than Erasmus, and whether the UK government will convince universities outside the UK to exempt British students from tuition fees.’

Universities UK, the collective voice of 140 universities in England, Scotland, Wales and Northern Ireland, struck a more positive note, with Vivienne Stern, Director of Universities UK International, saying:

‘While we are obviously disappointed that the UK will no longer be part of the Erasmus scheme, it is significant that the government has committed to a generously funded scheme despite current economic pressures.

‘The new Turing scheme is a fantastic development and will provide global opportunities for up to 35,000 UK students to study and work abroad. It is a good investment in the future of students – not only those in universities but in schools and colleges who will also benefit.’

UK Financial Contribution Not Yet Agreed, Additional Terms Required for Horizon Europe

The Agreement does not specify exact figures for the UK’s annual pay-in to EU programmes. Instead, its contribution will be calculated based on the country’s gross domestic product as a share of EU GDP – the ‘operational’ contribution. Any additional ‘participation fee’ will be levied at 4% of the country’s operational sum. The operational contribution may be adjusted upwards or downwards ‘retrospectively’, depending on how much the UK takes out against how much it contributes to the EU pot.

The Agreement also stipulates that the method for calculating the UK’s financial contribution to Horizon Europe will be different from the method used in the other EU programmes, suggesting negotiating UK association to Horizon Europe is not likely to be completed quickly. It has been suggested that if there is no deal by the time the first Horizon grant competitions are announced, the European Commission may still grant UK provisional eligibility to the programme.

Agreement Awaits Ratification

In the UK, the EU (Future Relationship) Bill bringing the Agreement into UK law was backed by the House of Commons by 521 to 73 votes after Parliament was recalled. It is expected that the deal will be formally accepted by the European Parliament in January. The next step will be for the European Council to adopt the decision on the conclusion of the agreement before the anticipated end date of the provisional deal on 28 February 2021.

RESEARCHconnect provides ongoing support via coverage of research funding and policy, helping the research community as it navigates working during the COVID-19 pandemic. We will continue to keep you informed about events set to have a huge impact in 2021, including the launch of Horizon Europe and how the EU-UK Trade and Cooperation Agreement will help shape the programme going forward. To find out more about how RESEARCHconnect can keep you in the know, and subscription fees, contact us today.