Updated 18 January 2021
This blog is one of a series answering some frequently asked questions (FAQs) about the UK’s exit from the EU, and what changes on 1 January 2021. These blogs are based on information available at the time of publication, and clearly the situation, and our understanding of it, will continue to be subject to change.
They provide some general information and should not be seen as definitive advice for individual circumstances which may be complex. However, wherever possible links to further sources of information are provided.
Other blogs cover the topics below, and can be found at the following links:
Brexit FAQs: Funding, Fishing, Farming and Support for Business
Will the UK continue to participate in EU funding programmes such as Horizon Europe and Erasmus + after the end of the transition period?
While leaving the EU means the UK can no longer automatically participate in EU programmes, the EU-UK Trade and Cooperation Agreement does include provision for the UK to continue participating in the Horizon Europe research funding scheme. An agreement on participation in the Erasmus + education and training scheme was not reached and the UK will no longer participate.
UK Research and Innovation states that the UK Government’s continued association to Horizon Europe means UK scientists, researchers and businesses will have:
“…access to funding under the programme on equivalent terms as organisations in EU countries.”
The EU-UK Agreement sets out an ambition for the UK to associate to Horizon Europe in time to participate from the beginning of the new 2021-27 research programme, stating:
“It is the Parties’ firm intention that the Specialised Committee on Participation in Union Programmes will adopt the Protocols at the earliest opportunity to allow their implementation as soon as possible, in particular with the ambition that United Kingdom entities would be able to participate from the beginning of the programmes and activities identified, ensuring relevant arrangements and agreements are in place, insofar as possible and in accordance with Union legislation.”
The timeline for UK association to Horizon Europe is still to be confirmed. The latest information and updates are being collated by the UK Research Office.
Following the failure to reach a deal on Erasmus +, the UK Government has announced the new Turing Scheme will take its place in the UK from September 2021. The UK Government will provide £100m funding for the scheme, with around 35,000 students expected to go on overseas placements. It is not yet clear whether the new scheme will have the same impact as Erasmus +.
The UK Government has committed to establish a UK Shared Prosperity Fund to replace EU structural funds (which support economic development across the EU). The UK Government’s Spending Review 2020 confirmed that UK-wide replacement funding will “at least match current EU receipts, on average reaching around of £1.5 billion a year”. Further details are expected in Spring 2021.
The UK Internal Market Act provides UK Ministers with a single, comprehensive power to provide financial assistance in all parts of the United Kingdom for the purposes of:
- economic development
- culture, sporting activities
- domestic educational and training activities and exchanges
- international educational and training activities and exchanges.
This power allows UK Ministers to spend funds in devolved areas. The list of policy areas where financial assistance may be provided appears to cover, in addition to structural funds, EU programmes such as Erasmus+ and Creative Europe.
The Scottish Government was responsible for managing the spending of structural funds in Scotland when the UK was an EU member state. The UK Government’s plans for the Shared Prosperity Fund and the conferring of a power on UK Ministers to spend in all parts of the United Kingdom, including in devolved areas, appears to enable UK Ministers to run and manage a new funding programme with or without the input of Scottish Ministers.
In November 2020, the Scottish Government published its plans for the replacement of structural funds in Scotland. The document set out the Scottish Government framework for Scotland's allocation of the UK Shared Prosperity Fund.
On 15 January 2021 the Chief Secretary to the Treasury wrote to the Cabinet Secretary for Finance, indicating that the Shared Prosperity Fund would operate UK wide, and would use the new financial assistance powers in the UK Internal Market Act. Reiterating the Spending review 2020 (box 3.1), the Chief Secretary said in his letter that:
The UK Shared Prosperity Fund will help to level up and create opportunity across the UK in places most in need. It will operate UK-wide, using the new financial assistance powers in the UK Internal Market Act. We will ramp up funding so that total domestic UK-wide funding will at least match EU receipts on average reaching around £1.5bn a year. We will confirm multi-year profiles at the next Spending Review
The Common Fisheries Policy (CFP) is the mechanism and set of rules through which European fishing fleets and fish stocks are managed. It began in 1970 and has been updated several times, most recently in 2014.
The CFP applies to all EU member states, but only 22 of the EU27 are coastal states. The European Commission says that it is “designed to manage a common resource, it gives all European fishing fleets equal access to EU waters and fishing grounds and allows fishermen to compete fairly”. In the context of finite stocks of fish, it also aims to ensure that the European fishing industry is sustainable and does not threaten the fish population size and productivity over the long term
Further details are available in this explainer from the Institute for Government
Will the UK continue to participate in the EU’s Common Fisheries Policy after the end of the transition period?
The UK became an independent coastal state on 31 January 2020 but UK fisheries continued to be governed by the EU’s Common Fisheries Policy during the transition period.
After the transition period ended on 31 December 2020, the UK was no longer subject to the EU’s Common Fisheries Policy. The UK Government and devolved administrations are responsible for fisheries management in UK waters.
The UK-EU Trade and Cooperation Agreement provides a continuation of reciprocal access for UK and EU vessels to each other’s waters until 30 June 2026. After that, access will be subject to annual negotiations.
The EU Common Agricultural Policy (CAP) sets common rules and regulations for agriculture and rural development and provides financial assistance to farmers. This is an EU-wide policy and financial assistance programme. This purpose of the CAP is to support farming and allow farmers across the EU to compete on a level playing field.
Broadly, there are two key elements to the CAP: Direct payments schemes (pillar 1) and rural development policy (pillar 2).
The UK has now left the Common Agricultural Policy, and so is no longer required to participate in these programmes. However, Scottish Government policy is for Scotland to maintain the same policies and funding programmes as far as possible in the short-term, before a transition to a new long-term policy and rural support programme (see FAQs on direct payments for further details).
These are payments made to farmers based on the land they farm; the payment is made per eligible hectare of land that is actively farmed. Direct payment schemes include:
- the basic payment, which provides income support to farmers
- the greening payment, which requires farmers to adopt certain environmentally beneficial practices
- payments for young farmers
- in Scotland, additional coupled support for the beef and sheep sectors.
Under the Common Agricultural Policy, this suite of schemes is known as Pillar 1. While the UK was a member of the EU, funding for direct payments came from the EU to national governments. National governments then made the payments to farmers. The UK left the EU’s CAP Direct Payments scheme in 2020, earlier than other EU programmes. It was agreed in the Withdrawal Agreement that the UK would not be part of the EU scheme for 2020 because CAP Direct Payments are paid in arrears, so EU payments for the 2020 claim year are funded from the EU's new 2021-2027 multi-annual budget, which the UK is not part of (because it has left the EU). Accordingly funding for UK farmers from the claim year 2020 is from the UK Treasury rather than the EU.
Under the Common Agricultural Policy, the suite of schemes and regulations for rural development is known as Pillar 2. In Scotland, rural development policy is delivered under the Scottish Rural Development Programme (SRDP), which includes schemes:• to improve environmental performance (known as agri-environment schemes) • to support food marketing • to foster innovation • to support rural communities • to assist new entrants to farming.
Under the SRDP, contracts may be multi-annual - that is, they ensure payment in exchange for specific activities carried out over a number of years. The current SRDP ended in 2020. However, the Scottish Government’s policy is to continue existing policies and programmes as far as possible until a new longer-term rural support policy is in place.
The Scottish Government passed the Agriculture (Retained EU Law and Data) (Scotland) Act 2020 to enable payments to continue to be made to Scottish farmers after 2020.
The Scottish Government’s current policy is set out in their 2018 consultation document, “Stability and Simplicity”. In this the government sets out plans to maintain current policy and funding arrangements as far as possible, with minor changes until 2024. From 2024, a new policy is intended to be in place. Proposals for a new policy are currently being developed by the Farming and Food Production Future Policy Group.
This means that direct payments are intended to continue in their current form in Scotland in the short term.
However, some disagreements on whether sufficient rural funding is available from the UK Treasury in the coming years remains between the UK and Scottish Governments.
EU regulations governing Pillar 2 (rural development) of the EU Common Agricultural Policy applied until the end of the transition period (31 December 2020). From 1 January 2021, the UK and devolved legislatures are able to make changes as it will be for them to develop new policies and schemes for agriculture and rural development.
If changes are not made then the same rules will continue to apply. This is because much of the law in this area will be adopted into domestic law (Scots law and the law of the other parts of the UK) as retained EU law. The ability to make changes to the law in Scotland beyond 2020 is provided for under the Agriculture (Retained EU Law and Data) (Scotland) Act 2020, and secondary legislation has been passed to make some modifications from 2021.
The Scottish Government’s current policy is set out in their 2018 consultation document, “Stability and Simplicity”. In this the government sets out plans to maintain current policy and funding arrangements as far as possible, with minor changes, until 2024. From 2024, a new policy is intended to be in place. Proposals for a new policy are currently being developed by the Farming and Food Production Future Policy Group.
This means that rural development schemes are intended to continue in their current form in Scotland in the short term. However, some changes have already been made. For example, under some SRDP schemes, multi-annual contracts are issued for activities that are carried out over several years, for example, in the agri-environment climate scheme (AECS). Only a limited scheme is open for applications to the Agri-Environment Climate Scheme in 2021. A restricted round for new applications will open on the 25th of January 2021 and close after an extended application period on the 30th of June 2021. It will only be open for:
- organic conversion and maintenance
- management that benefits designated sites or specific bird species in certain areas
- slurry storage in priority water quality areas
- Improving public access.
In addition, some disagreements on whether sufficient rural funding is available from the UK Treasury in the coming years remains between the UK and Scottish Governments.
Will the UK continue to participate in the Common Agricultural Policy now the transition period has ended?
No. From 1 January 2021, the UK is now no longer part of the EU Common Agricultural Policy (CAP) and will not receive CAP funding from the EU.
However, given much of the law in this area has become domestic law (as part of retained EU law) the same rules will continue to apply until the UK and devolved legislatures decide to make new laws to change the rules.
The Scottish Government has passed legislation (the Agriculture (Retained EU Law and Data) (Scotland) Act 2020) which enables current schemes to be continued, and for the Scottish CAP legislation to be improved and simplified in the short-term. The Scottish Government has committed to long-term changes to rural policy from 2024, though details of this are yet to be published.
The UK Government has also passed legislation giving powers to change the rules in England after the end of the transition period on 31 December 2020 and published a transition plan to a new rural policy for England.
Chlorinated chicken has become symbolic for food produced to lower standards than is currently allowed under EU rules. After 1 January 2021, the UK does still, by and large, have the same rules and regulations for food production and marketing as the EU. These regulations became a new body of law – retained EU law – on 31 December 2020. The difference is that UK nations may be able to make changes to these inherited rules, should they wish to do so. There was no automatic change that allowed chlorinated chicken to be produced and sold in the UK on 1 January 2021.
Food safety, food production and marketing are devolved matters, and therefore Scotland will be able to decide whether chlorinated chicken can be produced and marketed in Scotland. However, there may be interactions with the UK Internal Market Act 2020 and trade agreements which could come in on top of Scottish rules in certain circumstances.
Under the Internal Market Act, which was passed by the UK Parliament and obtained Royal Assent on 17 December 2020, the principle of mutual recognition means that if a good is approved for sale in one UK nation, it can also be sold in another UK nation. So if one UK nation were to lower its food production standards, this means that goods produced to those lower standards in that UK nation will be able to be sold on the market in the other nations of the UK. The same will apply for goods imported into one part of the UK that can legally be sold in that part; such goods will also be able to be sold in the other parts of the UK.
In terms of trade, the UK could accept the import of goods produced to different standards as part of any future free trade agreement (FTA). It could do so without changing the standards that goods produced in the UK must meet. Or, the UK as a whole, or each of the four UK nations, could change domestic standards to ensure a level playing field between domestic and international producers. However, to trade with the EU, goods produced in the UK which are to be exported to the EU will still need to be produced to EU standards. There is more information on trade agreements and food standards, using chlorinated chicken as an example, in a SPICe briefing on trade and standards.
The Prepare for Brexit website - developed in partnership by Business Gateway, Highlands and Islands Enterprise, Scottish Development International, Scottish Enterprise and Skills Development Scotland – is open to businesses in Scotland who are looking to learn how to adapt to the new business environment now that the UK has left the EU. Information is available to help companies in Scotland understand what the EU exit means for them.
Scottish businesses should also visit the GOV.UK's Brexit checker to identify the key changes affecting their business. Doing business with Europe has changed and Scottish businesses now need to follow new rules on exports, imports, tariffs, data and hiring.
Further information on chemicals and financial services is summarised in House of Commons Library briefings