Brexit: What Now for Health and Social Care?

19-08-2016

By Jane Payling, Head of Health & Integration, CIPFA

Two months after the historic decision to leave the EU, we explore the impact on health services with a particular focus on the workforce, research and funding availability. These themes will also be examined at CIPFA's forthcoming Health and Social Care Conference in October. 

Staffing shortages in health and social care continue to be one of the main areas of service delivery and financial concern in the system.  Approximately 10% of medical staff in the NHS come from the EU, along with 5% of other clinical staff including nursing.  Similar percentages are in place in social care provision. The impact of a decision to leave the EU on the workforce depends fundamentally on the outcome of the Brexit negotiations and the resulting relationship with the EU.  If the UK opted for the ‘Norway’ model there would be the least amount of change as it is likely the UK would need to sign up to retaining the four key freedoms of the EU: freedom of people, goods, services and capital.  

Staff recruitment

If the UK were to approach the EU via its membership of the World Trade Organisation (WTO), which would be the most radical option, the NHS European Office has suggested this would mean recruitment from the EU could take longer and become more onerous. This would increase the existing difficulties of recruiting in some professions and local areas.  Although we will have to await the outcome of the negotiations to see what happens to staffing, on the ground uncertainty and a degree of disappointment is rife amongst EU citizens currently living in the UK which is already causing disruptions in these vital labour markets.

Impact on research

The impact on research and collaboration will again be fundamentally affected by the degree of separation agreed in the final negotiations.  The NHS European Office suggests that the ‘Norway’ and ‘Switzerland’ models should allow continued collaborative work and applications for funding in this important area – although current discussions with Switzerland regarding access to research funding is less positive.  More radical positions are likely to exclude the UK from accessing research funding, and could, without careful negotiation, also lead to the loss of important European networking opportunities such as the recently established European reference networks for rare and complex diseases.  

While we await the trigger of article 50 and during the two year negotiation period it should be ‘business as usual’ for EU research, with some reassurance being provided by an announcement that UK teams are still eligible to apply for the latest round of Horizon 2020 funding.  However, as anyone who has experienced the highly detailed process of research bidding will appreciate, it is likely more marginal applications will have already reduced.  

Finances and health

The final, and potentially most significant area is the impact on overall public sector finances.  Health is the second highest area of public spending in the UK, and despite its relative protection during recent austerity, CIPFA believes there will be a significant shortfall over the period to 2020.  Social care has benefited less from protection, and is coming under extreme pressure as local authorities continue to fulfil their statutory obligations to balance the books.  As the impact of Brexit unfolds, any effect on the economy will inevitably knock on to public finances and then to the NHS and supporting areas of the public expenditure.  Daily coverage in the press suggests anything from minimal to major economic impact due to Brexit. 

In reality, two months in from a referendum decision is far too early to see any major long term impacts.  Suggestions from the former Chancellor, George Osborne, that an emergency budget would be required have been set aside, for the time-being at least. This provides some reassurance that existing spending plans will continue in the short term.  Indeed, the possibility of increased fiscal stimulation might benefit health and social care, particularly on capital investment.  

Economic impact

We will have to wait until the next budget announcement to see the more detail on the immediate impact.  Longer term impacts again depend on the degree of separation from the single market. In its recent report, the Institute of Fiscal Studies suggested that options in which the UK continues to be a member of the single market could be worth 4% more on GDP relative to WTO access to the EU market only.  Given the difficulties of living within the ‘protected’ NHS resources being experienced, the prospect of further or longer austerity is extremely worrying.  

To quote Elizabetta Zanon, Director of the NHS European Office, ‘A prolonged economic fallout could indeed have a chilling effect on the NHS budget, which in turn could impact on patient care. It could potentially lead to longer waiting times, or reduced access to innovative, expensive medicines and health technologies, or in a lowering of quality.’

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