THE BLOG

Brexit and Public Service: We Might a Well Toss a Coin to Decide Our Vote

23/03/2016 11:22 GMT | Updated 23/03/2017 09:12 GMT

On 23 June 2016, the UK votes in a referendum on whether to stay or leave the European Union (EU). At the present time, opinion polls suggest the result is too close to call but this situation is promoting intense consideration of the impact of the UK leaving the EU (BREXIT).

One issue to consider is that of public services and the potential impact of BREXIT on UK public services. Clearly, there are many factors, which need to be considered when thinking about the impact of BREXIT such as the economy, security, energy etc and it would be unwise to focus, just, on any one of these issues when making a decision to vote. Hence, in considering the impact on public services, one also needs to consider the other impacts alongside. Some thought about most or all of the issues is desirable, including, of course, the interplay between them. For example, the impact of BREXIT on the UK economy will affect the public finances, which fund public services.

In considering the impact of BREXIT on public services, we have to recognise that the term "public services" is extremely wide. However, perhaps the main public services which are recognised as being of greatest importance by the general public would be the following:

• Health

• Education

• Local government

• Criminal justice

• Welfare

• National security

In undertaking an analysis of the impact of BREXIT on public services (or any other issue), one needs to bear in mind the considerable levels of uncertainty which will exist whether the UK leaves or stays in the UK. Some key uncertainties include:

• The impact on the UK as a trading nation is very uncertain since we have no idea what future arrangements with the EU might look like

• The ongoing impact of the migrant crisis is uncertain and consequently the potential impact on the EU is also uncertain

• The implications for future regulation of wide areas of life is uncertain

• The future of economic growth in the Eurozone economies which is currently very sluggish and may worsen

• The long term future of the migrant crisis currently affecting Europe and the potential accession of Turkey to the EU

Hence, any statement, by anyone, about the future of the UK inside or outside the EU needs to be treated with caution because much of what is being said is dependent about assumptions that are being made about the situation with or without BREXIT.

In looking at the impact of BREXIT on public services I have focussed on the following four main themes

1. Regulation

2. Public service policy

3. Demand for public services

4. Resources to deliver public services

Regulation

An EU regulation is a legal act of the European Union that becomes immediately enforceable as law in all member states simultaneously. Regulations can be distinguished from directives, which, at least in principle, need to be transposed into national law. Nevertheless, one might argue that the impact of regulations and directives is broadly the same.

The EU has an extensive regulatory involvement in the affairs of member states in a huge variety of areas including:

• Procurement

• Environment

• Employment

• Energy etc etc

This is perhaps the most heated area of debate about the role of the EU with people complaining about so-called Eurocrats imposing regulations on the UK concerning such arcane matters as the "straightness of a sausage". Many of these stories are, of course, folklore.

If the UK left the EU then, clearly, in legal terms it would be free from the EU regulatory regime. Perhaps three key questions can be posed concerning the impact of BREXIT on the regulatory regime in the UK

1. What would be the impact on the UK, both positive and negative, of being released from the EU regulatory regime?

2. Would the UK substitute its own regulatory regime in place of the EU regime? Would that domestic regime be more or less burdensome?

3. As part of new trade arrangements with the EU, would the UK be required to conform to, at least, some of the existing EU regulatory regime?

Regarding question 1, huge claims are made for the likely savings to UK businesses of being released from the EU regulatory regime but maybe these figures need to be taken "with a pinch of salt". Others see the loss of EU regulation as having negative impacts since they see regulation from unelected Eurocrats as protecting us from our own democratically elected governments who may want a looser regulatory regime (e.g. environmental protection). This view is understandable provided one recognises that, sometime in the future, the EU might introduce regulations, which one disagrees with, but one has no means of influencing what is being done.

Regarding questions 2 and 3, I would suggest that the answer to both questions would be yes, at least to some degree - governments love regulating what we do. However, the extent to which BREXIT might provide a less regulated environment is one of the big uncertainties already referred to above.

Public service policy

This concerns the role of the EU in relation to public service policy formulation. To a large extent policy formulation in relation to public services is a nation state role and the EU has only a limited involvement in a supporting capacity. For example, in relation to education, Article 165 of the Treaty on the Functioning of the European Union, the Community states that the EU:

"Shall contribute to the development of quality education by encouraging cooperation between Member States, through actions such as promoting the mobility of citizens, designing joint study programmes, establishing networks, exchanging information or teaching languages of the European Union. It also contains a commitment to promote life-long learning for all citizens of the Union".

Similarly, health policy and the organisation, financing and management of healthcare is predominantly a national responsibility of member countries. However, the EU also undertakes some health-related activities, in particular, by supporting co-operation between member states in order to protect and promote public health. This clearly makes sense since viruses and bacteria don't recognise national borders.

However, outside of the main policy dimension European Union law has a major impact on many public services. Most of this impact comes from laws not specifically designed as public policy interventions but in relation to employment, procurement and environmental roles etc described above.

However, this should not be taken to mean that the policy role of EU is negligible, static or will remain unchanged. The EU has taken a growing role in setting EU-wide targets for some public services and published EU-wide policy papers. I suggest it would be naive to think anything other than that the EU will try to take stronger role in relation to public services policy under the banner of "ever closer union". Whether, within the EU, the British would be able to opt out from a growing EU involvement in public service policy remains to be seen.

Demands for public services

If one had to summarise the main drivers of demand for public services they would probably be the following:

• Population size

• Population structure including the ageing of the population

• Socio-economic situations and trends

• Technology creating demand for new services

Many of these will remain the same whether the UK is in or out of the EU but the one that will be affected concerns the growth of the population through immigration to the UK.

Recent ONS projections suggest that the population of the UK will grow from 64 million in 2014 to 69.8 million in 2027 and 74.5 million by 2039. Well over half of the annual population growth is caused by immigration and the dominance of immigration is projected to increase as time goes on.

Clearly such population growth whether it be indigenous or through immigration will increase demands for public services especially health, education and housing. Some will argue that these increased service demands will be counteracted by the economic growth (and hence additional public finance to fund public services) generated through having a larger working population but, I suggest, this is a contestable assertion, which rests more on hope than evidence.

What must be emphasised is that the population projections mentioned above were prepared prior to (and take no account of) the current migrant crisis in the EU. Moreover, it is likely that this migrant crisis represents much longer-term phenomena than currently expected. Waves of migrants from Africa and Asia can expected to try and enter Europe for many years to come as a consequence, of war, civil strife, natural disasters and climate change,

Having stronger control on immigration should enable the UK to keep downward pressure on immigrant numbers (and hence public service demands) while allowing the controlled immigration of key workers needed to boost economic growth. Thus, the key question is whether greater control over immigration can be exerted by being outside the EU than inside the EU especially in the context of the migrant crisis and the possible accession of Turkey to the EU. This is a strongly contested issue but on balance, I suggest that BREXIT is likely to allow the UK to avoid the scale of immigration that could destabilise public services. Once again, this whole issue is clouded with uncertainty.

Resources to deliver public services

This section concerns the resources (financial and human) that are needed to operate the range of public services. There are four issues considered

• Economic growth - economic growth provides the means for government to generate additional tax revenues to fund the growth in public services needed to meet increasing demands. The greater the level of growth in GDP, the more funds can be made available for public services. Thus, one impact of BREXIT on public services concerns the impact of BREXIT on UK economic growth. This is an extremely complex question involving issues of trade agreements, reduced bureaucracy on business etc and both sides of the debate claim that their approach is best for the British economy. As already noted, the problem here is the almost complete uncertainty about what sort of trade arrangement the UK could negotiate with the EU after exit and the economic situation in the rest of the EU. While the EU is a big market for the UK, the current reality is that it is a very stagnant market will little prospects of healthy economic growth in the near future. Indeed the migrant crisis is likely to damage EU economic prospects still further

• EU funding - all EU countries make financial contributions to the EU budget and receive funds back in the form of EU spending in their country. Inevitably, some countries are net contributors while others are net receivers. In 2015, the UK made a contribution of £13 billion to the EU and received back some £4 billion thus making us one of the larger (along with Germany, France and Italy) net contributors. However, it could be argued that this is a false figure since the UK's contribution to the EU is discounted by £5 billion as a consequence of the actions of the Thatcher government in the 1980s. There has already been some pressure from other EU countries for this discount to be terminated thus making the UK an even larger net contributor,

It could be argued that leaving the EU would mean that the UK would gain £9 billion per annum by no longer having to make such contributions and this money could be used by the UK government to fund additional public services. While this may be true, the reality is that the amount involved, while large, represents but a small percentage of the UK's £700 billion of public spending

• EU grants - EU expenditure in the UK largely comprises grants made to various organisations in a wide range of areas including: agriculture, science, education and training, regional development, transport etc. Clearly, BREXIT would mean the end of such grant aid in the UK. One might argue that this shouldn't matter since the UK government could make such grants available using the funds, which are currently contributed to the EU. While this is true in theory there are a million reasons why it might not happen. This is a concern of many, and very recently, there were strong concerns expressed by UK research scientists that BREXIT might lead to an overall loss of science research funding to the UK. A particular area of concern surrounds EU grants for regional development and certain areas of the UK (e.g. Wales, Scotland, and the North East) are heavily reliant on EU development grants to help their regional economies. There seems a high probability that, following BREXIT our London-centric government would not maintain the level of regional grant aid needed in these areas and funding would be diverted to the South East as always seems to happen.

• Access to Skilled Human Resources - many public services rely strongly on skilled professionals (e.g. doctors, nurses, teachers etc) who have come to the UK from other countries. Leaving aside the questionable morality of recruiting such staff from countries which can ill-afford to lose them, the question is whether BREXIT will affect the availability of staff to UK public services. The answer here must surely be no. While BREXIT would bring an end to the free movement of labour between EU countries, the UK would be free to have an immigration system (a points system) which allows entry to people from any country who bring the skills that the country needs.

Conclusion

It is truism to say that a decision about BREXIT is a very difficult decision and the most difficult decision faced by UK citizens since 1975, the time of the last EU referendum. In fact, it is even more difficult. I am one of those who feel that we were completely mislead in 1975 in voting for what was supposed to be a"European Economic Community" not an entity which has become involved in all aspects of public life and whose borders now reach to the Middle East and Asia. Nevertheless, we are where we are and we now have to recognise that withdrawal from the EU in 2016 will be much more disruptive that it would have been in 1975.

While I can see many advantages to UK public services from BREXIT, it must be emphasised that the degree of uncertainty involved is extremely large whether we stay or leave. We should be treating with contempt a government that is asking us to make such a fundamental decision, which will impact for generations to come when we only have half the story. We might a