News Article

WMiC, Issue 18 - Local Government and Brexit

Posted on 20 October 2017 (Permalink)

Devolution

While attempts by local government to forge a new constitutional settlement with central government long pre-date the prospect of Brexit, the potential repatriation of powers has provided an opportunity to reinvigorate the debate and to bring about further devolution. Since the Brexit vote, council organisations have been calling on the Government to ensure that leaving the EU does not result in Westminster and the other devolved national administrations hoarding powers. Indeed, last November, the Local Government Association (LGA) together with its counterparts in Scotland, Wales and Northern Ireland set out the need for further devolution to local communities across the UK after Brexit. In particular, they called for constitutional talks on the key principles of subsidiarity, so that power is transferred to the level of government closest to the people; securing and enhancing the legal position of local government, giving it a defined set of powers and responsibilities; and providing greater fiscal autonomy.

It seems then that Brexit is potentially an opportunity to bring about significant change at the local level. During the summer, the Charted Institute of Public Finance and Accounting (CIPFA) launched their Brexit Commission. At the time, Julia Goldsworthy the former Liberal Democrat MP who chairs the Commission, said that “the legal, fiscal and policy changes that will accompany Brexit must be converted into meaningful opportunities to reform our public services - improving outcomes for the citizens that rely on them and reducing regional disparities”. The Commission is set to publish “evidence based analysis of the relationship between UK public services and EU funding” later this year, alongside recommendations on how future funding mechanisms might best work.

 

New Commons Inquiry

However, making sure that the voice of local areas is heard at a time when the Government is occupied with the general mechanics of Brexit is unlikely to be easy. As the negotiations continue and related legislation begins to be debated in Parliament, the House of Commons Communities and Local Government (CLG) Committee has just launched its “Brexit and Local Government” inquiry with its chair, Clive Betts, commenting that although “the previous secretary of state said last year that local government must be represented in the negations on the terms of the UK’s exit from the EU … the role of local authorities post Brexit is still unclear”.

Taking evidence until 14th November, the inquiry will investigate devolution and how leaving the EU might affect investment, development and economic funding. It will also look at the employment of EU nationals and how local workforces such as adult social care and construction might be affected. In broad terms the Inquiry is calling for evidence on -

  • What are the greatest risks and opportunities for local government posed by Brexit?
  • What measures should the government take to provide more certainty and stability for local government in the light of Brexit?
  • What powers could be devolved from the EU directly to local authorities?
  • The extent to which local government’s voice is being heard in the Brexit negotiations and how representation can be improved?

 

Henry VIII powers

Perhaps as important as how local government is involved in the Brexit negotiations will be the extent to which it is involved in how EU legislation is translated into UK law. Responding to the White Paper on the Great Repeal Bill earlier this year, the LGA reinforced its view that “local government must play a central role in deciding whether to keep, amend or scrap EU laws once they are converted into domestic law”. While not ruled out by the Repeal Bill’s Henry VIII powers, these special powers would allow Government to independently amend the primary legislation, potentially removing parliamentary scrutiny by local MPs, let alone the involvement of local government.

 

Investment and economic impacts

One of the issues the CLG Inquiry is interested in is the potential effect of Brexit on investment. For many years the West Midlands has been particularly successful in securing investment from abroad, both in terms of the number of investment projects and the number of jobs they have created or protected. The annual EY Regional Attractiveness Survey, which allies analysis of this type of investment activity with a survey of global investors found some mixed messages in the results, saying that “for every positive indicator there is an equivalent negative development”. Significantly, however, they note that “while investors’ perceptions point to short-term stability … longer term perceptions are increasingly negative”.

 

Giving one perspective of potential economic impacts, the Centre for Cities and the LSE’s Centre for Economic Performance have mapped and attempted to quantify the possible effects of both a “hard” and “soft” Brexit on each local authority, focusing on the major urban areas. In doing so they find that “every local authority area is predicted to see a decrease in economic output”, with cities doing worse than their non-urban counterparts. Among their recommendations are for the Government to “consider the spatial implications of deals negotiated and to support cities to adapt to changes in the UK’s trading relationships” and that cities should combine the insight into how they might be effected with local knowledge to “consider how approaches to local economic development should be restructured.”

 

European funding

The EU is currently an important source of local regeneration and economic development funding. It is no surprise then, that there is great interest in how the government might replace the EU’s regional regeneration-funding mechanisms. The LGA for their part have called for the Government to work with councils to develop a “fully funded and locally-driven successor”, which crucially would give local areas “full control over how it is spent and what projects it is spent on”. A report by the LGA published in the summer suggested that this should be at least equivalent to the £8.4 billion of European Structural Investment Funds which areas across the UK are set to receive between 2014 and 2020. However, while similar in value, the objective would not be to create a “like for like” replacement but rather use the opportunity to create one that avoids defaulting to silo-based approaches” and is not “bogged down by government bureaucracy and delay”.

 

Procurement

Taking a different perspective, Centre of Local Economic Strategies (CLES) has published a discussion paper looking at the opportunities for public procurement Post-Brexit. Among the ideas they put forward is for a “beefed up” Public Services (Social Value) Act. This would be applied to both local procurers and central government, so that “social value is not a consideration in procurement BUT a requirement”. As such they suggest that alongside the traditional focus on cost and compliance, procurement should be used to help address challenges such as “youth unemployment, low skills and poor business sustainability”.

 

Workforce

The impacts of leaving the EU on the workforce will no doubt vary depending upon the sector and location. Specifically mentioned by the CLG Committee, according to the Commons Health Select Committee report on Health and Social Care and Brexit, some 90,000 people from EU countries work in adult social care and a further 60,000 in the NHS. In their report, the Committee recommended that the Government should “ensure that health and social care providers can retain and recruit the brightest and best from all parts of the globe and that the value of the contribution of the lower paid health and social care workers is recognised”.

Turning to another sector highlighted by the CLG Committee, construction, the Institution of Civil Engineers (ICE) suggested that around 9% of the UK’s construction workforce are EU nationals. In a recent briefing, they point to problems of implementing a points-based immigration system in the sector, which requires large numbers of unskilled and semi-skilled workers, and also problems from an existing skills shortage, which they say will reduce the UK’s capacity to deliver housing and major infrastructure projects - a significant issue when the Government is looking to radically increase house building. Among their recommendations are the recognition of constructions-skills on the UK Shortage Occupations list, construction students to be given the right to remain in the UK for a set period post study, and a long term programme to evolve skills and practices.

 

Sources: