Brexit and arts subsidies, Israel, economic crime and the Pioneer programme

Brexit, arts subsidies and the English National Opera

On 27th March 2023, the UK’s Subsidy Advice Unit (SAU) announced that it had accepted a request from Arts Council England for a report concerning a proposed subsidy of £11.46 million to English National Opera (ENO) to help the ENO transition to its new base outside London.

According to its announcement, the SAU will prepare a report, which will provide an evaluation of the Arts of Council of England assessment of whether the subsidy complies with the subsidy control requirements (Assessment of Compliance) of the Subsidy Control Act 2022. The SAU will complete its report within 30 working days (by 11th May 2023).

The brave world of UK subsidy control law following Brexit!

Brexit and Israel

Given the current political turmoil in Israel, it is worth reflecting on the fact that the crisis has been triggered by an essentially legal issue – the role and independence of the judiciary within the Israeli constitution.

According to an article by Michael Cross in the Law Society of England and Wales Gazette on 27th March 2023, the International Bar Association (IBA) has criticised the Netanyahu Government’s proposed legal “reforms” on the ground (amongst other things) that they would have the effect of dismantling checks on the executive through the independent judiciary and the independent legal opinions of the attorney general and of the legal advisers to government ministries. According to the IBA, “these reforms will curb legitimate oversight of the actions of government and the Knesset, leaving the executive free to use its power in a potentially arbitrary and discriminatory manner”.

The IBA also reportedly expressed concerns at the Netanyahu Government’s proposal to remove the Israeli Bar Association from its role in the licensing of lawyers and to place the regulation of the legal profession within the Israeli Ministry of Justice. According to the IBA, “it is essential … that access to the legal profession remains anchored on purely professional assessments and disciplinary proceedings against lawyers are brought before impartial committees of the appropriate lawyers’ associations, in accordance with the UN Basic Principles on the Role of Lawyers”.

Worrying times for Israeli democracy and Western liberal values.

In the current context, it may also be worth examining the trade and investment relationship between the UK and Israel, bearing in mind that there is a trade agreement in place between the two countries.

On 28th March 2023, the UK Department for Business & Trade (“DBT”) published one of its regular factsheets on trade and investment between the UK and Israel, showing that total trade in goods and services (exports plus imports) between the two countries was £7.0 billion, in current prices, in the four quarters to the end of Quarter 3 (Q3) 2022, an increase of 51.7% or £2.4 billion from the four quarters to the end of Q3 2021. Of this £7.0 billion:

  • Total UK exports to Israel amounted to £3.4 billion, in current prices, in the four quarters to the end of Q3 2022 (an increase of 26.3% or £699 million compared to the four quarters to the end of Q3 2021); and
  • Total UK imports from Israel amounted to £3.7 billion, in current prices, in the four quarters to the end of Q3 2022 (an increase of 85.8% or £1.7 billion compared to four quarters to the end of Q3 2021).

According to the DBT factsheet, Israel was the UK’s 37th largest trading partner in the four quarters to the end of Q3 2022, accounting for 0.4% of total UK trade.

The factsheet also showed that the outward stock of foreign direct investment (FDI) from the UK in Israel was – £6.2 billion, accounting for -0.3% of the total UK outward FDI stock and that, in the same year, the inward stock of foreign direct investment (FDI) in the UK from Israel was £1.1 billion, accounting for 0.1% of the total UK inward FDI stock.

The UK and Israel have had a long and multi-faceted relationship and Brexit and current events in Israel will no doubt leave their mark.

Brexit and Economic Crime

On 11th April 2023, the UK Government issued a press release and a policy paper confirming that it was tabling an amendment to their Economic Crime and Transparency Bill, then before the UK Parliament, to create a new “failure to prevent fraud” offence “to hold organisations to account if they profit from fraud committed by their employees” .

According to the policy paper, “under the new offence, an organisation will be liable where a specified fraud offence is committed by an employee or agent, for the organisation’s benefit, and the organisation did not have reasonable fraud prevention measures in place. It does not need to be demonstrated that company bosses ordered or knew about the fraud.”

The new offence will only apply to large bodies, corporate and partnerships (including, however, not only businesses but also large not-for-profit organisations such as charities, as well as incorporated public bodies) and will not apply to small and medium-sized enterprises (SMEs) “to avoid disproportionate burdens on SMEs and support economic growth”. The policy paper adds that “we have streamlined the offence by limiting it to fraud and false accounting, keeping money laundering responsibilities contained under the existing regulatory regime”. The UK Government will be under a statutory duty to publish guidance to set out what would be considered reasonable fraud prevention measures, “clarifying the expectations on business”.

The new offence will not apply to individuals but could apply in certain circumstances to organisations where the relevant organisation is based overseas but the employee or agent commits fraud under UK law.  Convicted organisations could be subject to an unlimited fine.

Meanwhile, the EU has also been active in seeking to combat economic crime and on 12th April 2023 the European Parliament published the report of its Committee on Economic and Monetary Affairs (ECON) and its Committee on Civil Liabilities, Justice and Home Affairs (LIBE) on the EU Commission’s legislative proposal for a Regulation establishing an Anti-Money Laundering Authority (AMLA) .

ECON and LIBE announced that they had adopted their report on the proposed AMLA Regulation on 28th March 2023 and the next step would be for the European Parliament to adopt its position during a plenary session in April 2023.

There is clearly lots happening in the area of economic crime regulation both in the UK and in the EU in the post-Brexit era.

Brexit and the UK’s Proposed Alternative “Pioneer” Programme

On 6th April 2023, the UK Government issued a policy paper entitled “Pioneer: global science for global good”, with the accompanying press release describing it as “a UK prospectus for opportunities beyond Horizon Europe”.

The press release states that the objective of the Pioneer prospectus is to set out how the UK Government plans to protect and support the UK science, research, technology and innovation (SRTI) sectors, “should association to Horizon on fair and appropriate terms not be possible”.

The press release contextualises Pioneer by stating that the UK Government “is discussing association to Horizon Europe with the EU and hopes these negotiations will be successful. This is our preference. But association would need to be on the basis of a good deal for the UK’s researchers, businesses and taxpayers. If we are not able to secure association on fair and appropriate terms, we will implement Pioneer – our bold, ambitious alternative.”

According to the press release, “Pioneer” comprises 4 interconnected offers as follows:

  • Pioneer Talent which would enhance the UK’s investment in discovery research as well as the UK’s already strong talent offer;
  • Pioneer Global which would complement and enhance partners’ existing international partnerships;
  • Pioneer Innovation which would increase UK support to business-led innovation across sectors, technologies and UK regions; and
  • Pioneer Infrastructure which would provide additional funding into UK SRTI infrastructure, building on successful programmes such as World Class labs

The Pioneer prospectus also reportedly includes an overview of future considerations of UK alternatives for the Copernicus and Euratom R&T programmes.

Interesting times!

Disclaimer: Nothing in the Legal Insights section and this blog is intended to provide legal or other professional advice and, if readers are interested, they should consider taking separate legal or other professional advice accordingly.