Brexit: Charities will lose £200m a year unless the Government steps in, a Parliamentary committee warns

Peers highlight fears that 'the UK Government would not be able to guarantee the level of funding currently leveraged from the EU'

Research into the body's immune defences is among projects which receive EU funding (Amelie Benoist/BSIP)

Brexit will deliver a £200m a year hit to charities unless the Government steps in to plug the gap, a parliamentary committee warns today.

Small charities will be punished hardest by the loss of vital grants, mostly from the European Social Fund (ESF), peers suggest.

Their report highlights fears that medical research charities – for conditions including cancer, heart disease, bone disease and obesity – will lose “considerable research funding and opportunities for collaboration”.

And it calls on ministers to publish a full assessment of the likely financial blow by the end of this year.

“This should include the impact of loss of funding as well as on research collaboration,” the House of Lords Committee on Charities said.

“The anticipated loss of funding when the UK leaves the European Union will impact on smaller charities the most, yet it is these that are already under the most significant funding pressures,” it added.

However, the Government has given no guarantee that grants from the ESF and other EU investment programmes will be picked up by the British taxpayer after 2020.

Even before then, only schemes which ministers believe offer proper value for money will continue to receive funding after Brexit, the Treasury said.

In evidence to the committee, the Brain Tumour Charity told of its “concern that the UK Government would not be able to guarantee the level of funding currently leveraged from the EU”.

The Royal Mencap Society described the ESF as a “major source of revenue” to help raise living standards and provide job opportunities for young people and the long-term unemployed.

And the British Heart Foundation pointed out that the UK received the second highest sum of all EU states from Horizon 2020, the research and innovation programme.

When questioned by the peers, Rob Wilson, the civil society minister, gave no guarantee to charities but insisted he was “listening to their concerns”.

“We recognise that charities will be affected by exiting the EU and there are a broad range of implications,” he admitted. Projects showing “strong value for money” would still be funded.

Elsewhere, the committee also said it had “grave concerns” about the Charity Commission’s proposal to charge charities an annual registration fee.

And it criticised the Government for causing “unnecessary concern” with an “anti-advocacy” clause in 2014 laws which “threatened the vital advocacy role of charities”.

Baroness Pitkeathley, the committee’s chairwoman, said: “Charities are the lifeblood of society. They play a fundamental role in our civil life and do so despite facing a multitude of challenges.

“Yet for them to continue to flourish, it is clear that they must be supported and promoted. We found that charities lead the way with innovation, but that this is at risk of being stifled by the ‘contract culture’.

“And, while advocacy is a sign of a healthy democracy, and is a central part of charities’ role, this role has been threatened by Government.”

Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations, seized on the committee’s concerns over the Commission’s plans to charge charities a fee.

“But the Lords have been unambiguous in saying that they do not think the Charity Commission have properly considered their plans to levy fees on charities,” he said.