June 23, 2016 will go down in history as the day the UK chose to leave the European Union (EU). While the country still riles in waves of uncertainty, talks of a second referendum gain weight, fuelled by the looming threat of a no-deal Brexit.
It’s no secret that universities fear for their ability to recruit EU students post-Brexit, while much has been said about the detrimental impact on university research once ties are cut with the EU’s pool of talent. But how will the loss of European Research Development Funds (ERDF) next year impact UK universities and SMEs?
The purpose of this specially-allocated EU fund is to transfer money from richer regions and distribute it across lesser-developed areas. This is done through investments in services and infrastructure, promoting innovation and supporting a nationwide start-up culture.
Between 2014-2020, ERDF will have subsidised 863 projects across the UK. Universities have pioneered a lot of these activities, with 62 higher education providers running 142 projects, securing a total investment of more than £26,627,123 in this period.
Manchester’s Graphene Institute was 38% funded by ERDF funding from the European Union. Without that, the building would have taken longer to build. On the Manchester University campus, the iconic building was built from scratch & contains £13 million of equipment. pic.twitter.com/ymTU7pPSOy
— The Remoaner #FPBE (@IRemoaner) 12 January 2019
Greentech Access to Innovation (A2i) is one such project. Blending the academic knowledge of London South Bank University (LSBU) with the real-world experience of industry partners, A2i grants London-based start-ups and SMEs the tools required to expand the potential of their low-carbon ideas.
“As London’s largest higher education recipient of ERDF funding, the impact to LSBU will be significant,” says Richard Howarth, Senior Marketing Manager at A2i. “A2i was set up with the specific intention of utilising ERDF money to harness and enhance the expertise within the university to support the aspiring low-carbon community within London.
“Without the ERDF there would be no A2i at all. Each of our (LSBU’s) seven ERDF projects will have ended and all staff employed on those projects will, most probably, have to seek alternative employment,” adds Howarth.
He explains that the combined commitment of LSBU and ERDF, which both co-fund the project, has allowed A2i to deliver high-quality workshops and consultancy, also granting access to facilities that would normally cost thousands a day for free to eligible SMEs.
While the quality of support would not be compromised with the loss of the ERDF, it would be charged at consultancy prices. The ERDF has effectively democratised the process, allowing A2i to judge collaborators on their capability rather than their income.
“We have 77 tenant businesses across our campus,” he says. “Those 77 businesses have created 337 jobs in the last five years, as well as raising £64m in charitable spending and £317m in revenue. Now, across our ERDF projects, before 2020, we aim to work with close to 1,000 SMEs with a similar demographic to that of our tenant community.”
Howarth notes that the impact of the university’s last completed ERDF project directly resulted in the creation of 43 new jobs, saving a further 47 jobs, on top of helping SMEs raise £1m in finance. “The scale of the impact of each ERDF project is absolutely enormous, a far greater benefit to the local economy than the cost to the EU for administering such support,” he adds.
These ripples of concern extend to universities across the UK, including those further north. Supporting three co-funded ERDF projects, Liverpool John Moores University (LJMU) is also feeling the heat.
LJMU’s LCR Activate project looks to partner with digital, creative or createch SMEs in Liverpool, Halton, Knowsley, Sefton, St Helens and Wirral. With a keen interest in emerging technologies, LCR Activate is a knowledge transfer programme providing practical, hands-on support through artificial intelligence (AI), cognitive computing, machine learning, virtual reality (VR), augmented reality (AR and more.
“Our project exists to meet market failure that exists at the local to regional level,” says Jonathon Clark, Business and Technology Manager at LCR Activate.
“Smaller businesses, SMEs, typically can’t access advanced technologies such as AI, VR and AR because it’s cost-prohibitive, or the facilities aren’t available locally at a price the SMEs can afford – whether that’s human resources, research and developers or the physical equipment itself. So, for us, ERDF allows us to operate and provide those services to SMEs.”
LCR Activate is lucky to have been backed by the UK government, meaning it will be funded until the end of the project in July 2020 regardless of the Brexit outcome. But Clark feels the result will impact whether or not the university will be able to apply for continuation from existing European pots.
“That’s kind of up in the air at the minute,” he says. “The university itself has a lot of these European projects, so I think our university, as well as most of the others, are nervous about how it could affect the ability of our academics to engage in cross-European projects.”
He says that LCR Activate’s partners are taking a ‘prepare for the worst, hope for the best’ approach to the matter. “A lot of what we do is, in a way, trying to Brexit-proof them. If we can make them more competitive, they’re going to be more resilient to any economic shock – whether that’s a recession, or Brexit, anything really.”
But one huge difference between these universities and projects lies in the economic differences of location. In 2016, for example, London contributed about £408 billion to the UK economy, more than 22 percent of the country’s total GDP. On the other hand, Liverpool’s economy was worth only £121 billion as of 2017. That’s a huge jump, comparatively.
Since the whole point of the ERDF is to try and lessen the economic imbalances that exist in countries like the UK, it’s the universities and SMEs in areas that are less economically-developed and competitive, like those up North, that will be hit the hardest.
Cheshire & Warrington-based #SMEs are encouraged to join @Eco_innovation_. The project is part-funded by ERDF & aims to link SMEs to research capabilities of the universities for facilitating R&D leading to new low carbon products & services https://t.co/MSqNVMRGJM #NorthWestHour pic.twitter.com/QgM7ShNA8o
— Thornton SciencePark (@ThorntonSciPark) 27 June 2018
“On the whole, projects like mine exist to try and address that balance through funding, through facilities and expertise,” says Clark. “So, there must be something to replace that – the university can’t just do this pro bono, for free, something has to pay for the time the academics spend and the cost of the research, the facilities and equipment.
“SMEs locally can’t afford it, and if there isn’t going to be a government replacement fund for us then we’re going to have to look at how we can make it work in the future.”
So how will Brexit and the withdrawal of the ERDF impact universities, SMEs and the UK’s regional economies?
As Howarth concludes: “It’s difficult to fully estimate the impact of Brexit on projects and support of this nature, but there’s no doubt that the impact will be negative to universities, SMEs, and our already worrying skills gap.”