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The Financial Times has found that the £1.4bn Brexit Opportunity Fund launched by Rishi Sunak last year is using money provided by existing government schemes.
Sunke, now prime minister, announced a “new £1.4bn global Britain investment fund” to support transformative economic activity in the 2021 autumn budget when he was chancellor.
As part of an effort labeled “seize the opportunities of Brexit and advance a global Britain”, budget documents said the fund would “provide grants to encourage international mobile companies to invest in the UK’s most critical and most innovative industries, including life sciences and automotive”.
But the FT has found that some of the grants so far have been allocated through existing programs – although the last spending review added new money in some cases. This effectively rebadges investments under the “global investment” banner, with recipients often unaware that they are being supported by the fund.
In a government response to the FT’s freedom of information request, GBIF beneficiaries include six projects planned by companies such as sustainable technology manufacturer Johnson Matthey and automotive groups BritishVolt and Ford.
The companies have committed funding through the Automotive Transformation Fund, a dedicated scheme set up in 2020, as well as other existing money pots. Offshore wind investment has been supported by the Offshore Wind Manufacturing Investment Support Scheme and Regional Growth Funds.
In at least one case, money was committed to a company before GBIF’s launch in April.
Jonathan Reynolds, Labour’s shadow business secretary, said: “This is yet another disappointment for businesses at a time when clear leadership and stability are desperately needed. This tiresome Tory tactic of smoke and mirrors over real tangible help burdens UK businesses with endless confusion and chaos.”
Existing funds have various purposes for the stated purpose of GBIF. The ATF is open to any UK-registered company for British projects to help develop an electrified supply chain. The Offshore Wind Manufacturing Scheme is open to offshore wind component manufacturers in disadvantaged or disadvantaged regions of the UK.
Although some of these funds have been “disbursed”, according to FOI data, due to certain conditions being attached, some have been committed but not paid.
In the case of BritishVault, ministers offered £100mn but no money was paid because the battery start-up had not yet met commercial objectives, including starting construction at its site in Blyth, Northumberland.
The Department for Business, Energy and Industrial Strategy said new money had been committed to various funds now counted under the GBIF but declined to say how much.
A BEIS spokesman said the Brexit Opportunities Fund “brought together a number of pre-existing, sector-specific funds under one banner”.
“The 2021 spending review agreed a significant proportion of new funding for this existing funding. It is not that all these scheme-specific monies were announced earlier and rebadged later,” he said.
“The Global Britain Investment Fund was established to help drive private investment in industries where the UK has both natural strengths and geographical spread.”
In last year’s Autumn Budget, the government said more than £800mn of the GBIF would go to support investment in the electrification of UK vehicles and their supply chain, and to support investment in zero-emission vehicle manufacturing, gigafactories and the electric vehicle supply chain. .
It said a further £354mn would boost investment in life sciences manufacturing and up to £230mn in the offshore wind sector.
FOI data shows that the total value of grants offered to date has added up to £180mn, or around 13 per cent of the total value of the fund.
“The GBIF was established to help drive private investment in industries where the UK has both natural strengths and geographical spread,” the FOI data said.
The FOI data also showed that there were no new offices to deal with the fund’s operating functions and that BEIS “currently uses the time of around 29 full-time staff to manage the delivery of the fund”.
Ford and British Volt declined to comment.
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