Responding to COVID-19: insight, support and guidance

Ready Brexit part 3

11-07-2017

Gillian Fawcett, Head of Governments, CIPFA

Roundup of recent events

We have been living in turbulent times since we last published our central government newsletter, lurching from a snap election to a minority government agreeing a £1bn deal with the Democratic Unionist Party (DUP) to form a minority government with a supply and confidence agreement in the House of Commons. Collective ministerial responsibility is also being thrown out the window over public sector pay and amidst all of this chaos we have begun negotiations with the European Commission to get the best possible exit deal for the UK. It is becoming increasingly difficult to keep track of events.

The Queen's speech

According to most commentators, the Queen’s speech lacked substance in significant policy areas and was dominated by Brexit-related Bills, including the repeal of the European Communities Act 1972 (the Great Repeal Bill) – the Bill ending the supremacy of EU law in the UK and transferring EU law onto the UK statute books. 

The Brexit negotiations

The focus over the last couple of weeks has been on Michel Barnier (European Chief Negotiator) and David Davis (Secretary of State for Exiting the EU) who have initiated discussions about the structure and timetabling of negotiations. But leaving discussions about trade off the table, at least for now, as attention is turned to alleviating citizens' concerns about the impact on borders.

Everyone is still talking about the cost of the divorce settlement with a mish-mash of estimates flying round, but whether it is £60bn or £85bn it is a hefty sum for the taxpayer to fund, particularly at a time when public services are creaking at the seams. To make things worse the Bank of England has also warned households that living standards will fall this year as a result of Brexit and this will work its way through to higher prices and meagre pay deals. The cost of Brexit weighs heavily alongside other pressures on public finances such as health, social care and housing where it is becoming overwhelmingly challenging to deliver efficient public services and provide maximum value for money. 

Likely impact of Brexit on public services

A cocktail of change will be required as we move into a post-Brexit world. For some, like central government departments, there will be the need to keep the machinery of government running whilst managing the impact of Brexit. There is a significant amount of transitional work to undertake as EU responsibilities move back to the UK and this may be at the expense of other policy areas. Policy choices about whether to recreate EU funds to the devolved nations and local government will also need to be introduced in a post-Brexit form.

A recent report by the National Audit Office says the civil service has already created more than 1,000 extra roles in the two new Brexit departments. This is a drain on the resources needed by other government departments to tackle key homeland policies that are in need of sweeping reform, such as health and social care for the elderly. We might well see a hiatus in public policy in these key areas. 

To date, a key problem is that the public are drip fed information about the costs and impact on public service provision of the ‘divorce settlement’ rather than being presented with a holistic picture about the impact of Brexit on specific parts of the public sector, such as health or local government. For example, the consequences of Brexit on the health sector are far wider than access to EU employees. The following would also need to be considered: the impact of a prolonged economic fallout leading to increasing waiting times in an already stretched service; restrictions on the ability to recruit and retain doctors and nurses from the EU; changes to working directives; less engagement in EU collaborative research funding and programmes; and expensive treatments and pharmaceuticals. A better understanding of the potential overall impact on public services will not only demonstrate to the public how it impacts on the services they receive but would also help to identify the real cost of leaving the EU on different parts of the public sector. 

What next?

Recognising the need to reach a deal with the EU that meets the requirements of the public sector and service users, CIPFA has established a Brexit Advisory Commission (the Commission) made up of public sector leaders, academics, accountants and economists to help inform negotiators through the Brexit process. A full outline about the Commission is in the following article 'CIPFA’s Brexit Advisory Commission for Public Services: Turning the Brexit challenge into an opportunity for the public sector'.

Summary

In summary, the weeks and months ahead will be testing times as negotiations press ahead. Whether we lurch from a ‘hard’ to a ‘soft’ Brexit is anyone’s guess. Nevertheless, it is important to re-emphasise that we need to reach a deal that meet the needs and best interests of the public sector and its users in the short, medium and long term.